The US Dollar Index (DXY) may be very close to closing the 12 months with its smallest annual vary since 1976, an unsustainable feat. The truth that volatility has gotten so compressed means we’ll nearly actually see at the very least some sort of uptick, which may solely profit merchants (assuming you aren’t quick volatility). It won’t be a large explosion in volatility however even when it have been a reversion again in the direction of the long-term imply that will be ok for creating significantly extra alternatives than what we noticed in 2019.
US Greenback Index Weekly Chart (52-wk historic volatility low)
EUR/USD chart under is a stitched collectively model of what it will have regarded like earlier than the Euro even got here into existence. Being that it accounts for almost all (~57%) of the DXY index we will see that the Euro after all displays the identical volatility sample. Discover how long-term volatility ebbs over time, from low to excessive and again once more. The identical cycles again and again regardless of drivers of every one being totally different.
EUR/USD Weekly Chart (volatility ebbing)
USD/CAD is an fascinating one, it not solely has the bottom stage of volatility since 1996, however has executed so with sequentially declining volatility over every quarter. This means a breakout may start within the subsequent couple of…