- US dollar trades near major peaks, but for how much longer?
- A EUR/USD break below major lows remains unlikely given current market conditions
- Potential for trend change favors our Momentum2 trading strategy
The US dollar trades near decade-plus highs versus the Euro, but a noteworthy drop in volatility prices makes a further Euro/US Dollar breakdown unlikely in the week ahead.
Indeed volatility prices have pulled back noticeably on a clear ease in market tensions. The US Dollar may have lost a key fundamental driver in rising interest rate expectations, and it may take a material shift in market conditions to force a larger Greenback rally.
Forex Volatility Prices Show Traders are Positioning for Slower Price Action
Data source: Bloomberg, DailyFX Calculations
Our trading strategy biases remain mostly unchanged as we keep focus on major trading ranges across dollar and yen pairs. The potential for trend change leaves us in favor of our Momentum2 trading strategy. Past performance is not indicative of future results, but this trading system has often done well in times of sustained trend reversals.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com