We could be at the start of a multi-year uptrend for the U.S. dollar. The USD broke above 87.00 on Monday, finally freeing itself from a 30-year downtrend. Many traders believe this breakthrough could bring new life to the U.S. dollar, leading to major uptrend movements in the Forex market within the near future.
Why all the fuss?
According to the Banks for International Settlements Triennial survey of Foreign Exchange, the USD makes up about 90% of all currency trading transactions and USD-related trades. So, to say the dollar is the MVP of our Forex prime time players is an understatement at best.
How will the breakthrough affect FX?
A stronger dollar could send shockwaves through the Forex market. As its strength continues to grow, so does market volatility. This is great news for traders as more volatility means more opportunities to capture pips. However, it’s important to keep a close eye on the market when volatility surges because as we all know, volatility will not stay elevated indefinitely. As the market moves in waves, prepare for some bearish movements along the way. This holds especially true for the JPY and NZD pairings.
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