Forex Strategy Outlook: US Dollar Reversal Threatens Key Strategies

The recent bounce in the US Dollar has taken many of our trend-following forex trading signals by surprise, and in fact some strategies have now gone long the USD following a shift in market sentiment. Momentum and Breakout systems generally had a good run as they sold into US Dollar weakness, but recent turndowns in the EUR/USD suggest markets could return to their wide trading ranges. Especially low volatility expectations serve as further confirmation, and a quiet week of event risk may relegate major currencies to fairly lackluster price moves.