Forex volatility continues to tumble, favoring tight trading ranges in key pairs
- Euro looks like a buy here versus the US Dollar as it trades near support
- Watching these trade setups in other major currency pairs
Forex volatility continues to tumble to fresh record lows, and low volatility prices suggest that major pairs will stick to tight trading ranges through the foreseeable future. It’s easy to become bored with such slow price action, but in truth our data shows that the majority of retail traders tend to do well in slow-moving markets. How do we trade?
In concrete terms, we’re looking to buy major currency pairs as they test support and sell if they approach resistance. The Euro in particular looks like an attractive buy at these levels; a break of the post-ECB low looks unlikely until we see a material shift in market conditions.
The fact is that FX options traders are betting on and hedging against some of the slowest currency market volatility on record. Obviously this has to give at some point; volatility does not trade at such extremely low levels forever. Yet until conditions shift we’ll continue to favor low-vol range trading across major pairs.
Forex Volatility Prices Continue to Fall to Record Lows
Data source: Bloomberg, DailyFX Calculations
Read more: Why is Forex Volatility So Low, and How do we Trade it?
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DailyFX Individual Currency Pair Conditions and Trading Strategy Bias
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