USD To Make A Big Move Despite Recent Market Performance
The forex market has been trading in a range-bound manner recently. However, the USD is primed to make a big move over the coming weeks as activities line up in the United States market.
Range-Bound Trading Dominates Market
The range-bound trading in the currency market occurs when the price bounces In between a specific high price and low price. The high price is the resistant level the currency can’t seem to break while the low price serves as the support which it doesn’t go below.
This pattern has been dominant in the forex market over the past few months, with the market lacking essential trends that could push the prices higher. During a range-bound trading period, the volatility level of the market is low.
At the moment, the USD is trading at its lowest volatility over the past half-decade. With the range-bound trading in play, there is less interest in the market from traders and some investors. However, that could change soon as the USD is expected to make a big move in the coming weeks.
Low Volatility Precedes A Big Market Move
While the USD is experiencing a run of stability and low volatility, it is expected to make a big move very soon. Over the past 25 years decades, a significant movement follows anytime the greenback records low volatility. For this reason, the USD is not expected to continue trading in this tight range for the remainder of the year.
A look at the low volatility periods recorded in 1996, 2007, and 2014 reveal that afterward, the greenback experienced increases by more than 10 percent. The USD has recorded gains against half of its top 10 competitors while weakening against the other half.
As the second half of the year approaches, the markets would be reassessing their assumptions, and this could help bring the high volatility back to the market.
In the coming week, the first US GDP for the year will be released on Friday, April 26th, and it is expected to provide a massive impact on the market. In the last quarter of 2018, the economy grew by at an annual rate of 2.2%.
Forex Traders – Get Ready
Forex traders should brace themselves for an increase in volatility in the market and a possible big USD move over the coming weeks. The rise in market activities and the long period of range-bound trading could see the market make bold moves. Thus, it is best to prepare for a busy trading period with many Forex signals and opportunities to trade ahead.