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Trading Video: Fresh Extremes for USDollar, EURUSD and USDJPY

By , Chief Currency Strategist
06 May 2014 03:20 GMT

Talking Points:

• Activity levels continue to collapse - leveraging the risk of heavy breakouts as conditions 'normalize'

USDollar joined the crowd of extremes with one of the smallest trading ranges on record

• While waiting for a resolution to 'risk' inactivity; the Euro, Pound and Aussie face event risk

See Today's Strategy Video to learn more about picking the proper strategy for the given market backdrop (discussing USDJPY in particular)

The pressure keeps building. On one hand, we have high profile congestion patterns on liquid benchmarks (S&P 500, USDollar, EURUSD) screaming breakout risk. On the other, volatility measures collapse to ever lower levels. This is an unsustainable contrast that leverages the risk of breakouts rather than promises a calm and steady market outlook. A resolution to the many alarming technical patterns likely comes from a catalyst with scope - a systemic shift in risk appetite. Yet, we can't subsist on placing medium-term trades awaiting the breakout to eventually come. There are short-term catalysts and those currencies and pairs that are not so beholden to speculative appetites. We look at the bigger picture as well as individual movers in the Euro, Aussie and Pound in today's Trading video.

Market conditions change, and our strategy should reflect those changes. We have coded the DailyFX-Plus strategies for Breakout, Range and Momentum to adapt to these market shifts.

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06 May 2014 03:20 GMT