US Dollar Set for Big Moves - Here are the Strategies We’re Watching

 Forex volatility prices rise sharply ahead of key US Nonfarm Payrolls report

- Strong moves in commodity-linked AUD, NZD, and CAD keeps focus on Breakout2 trading system

- Potential for strong trend moves in Euro, Yen moves points to Momentum2 system

The US Dollar is likely to see strong moves in the days ahead—particularly versus the Australian, Canadian, and New Zealand Dollars. We like these trading strategies.

Traders have kept the US currency in a tight trading range versus the Euro and other major counterparts, but that may change on a big week of economic event risk. And indeed volatility prices have risen considerably ahead of Friday’s US Nonfarm Payrolls report.

The US Dollar trades near important highs as traders are pricing in a roughly 50 percent chance that the US Federal Reserve will raise interest rates in September. Yet any major disappointments in Friday’s labor data could force a significant repricing and USD sell-off.

Forex Volatility Prices Rise Ahead of Key Economic Data

Data source: Bloomberg, DailyFX Calculations

High volatility risks—especially in Commodity Bloc pairs—keep our trading focus on the volatility-friendlyBreakout2 strategy, while the potential for trend shifts in other USD pairs suggests in certain commodity-linked USD pairs, while the potential for trend shifts in the Euro/US Dollar and Dollar/Japanese Yen pairs suggests the Momentum2 system could do well.

See the table below for full detail on market conditions and preferred trading strategies.

DailyFX Individual Currency Pair Conditions and Trading Strategy Bias

Understand the Breakout2 Trading System via our previous article

Auto trade the trend reversal-trading Momentum2system via our previous article.

Trade with strong trends via our Momentum1 Trading System

Use our counter-trend Range2 Trading system