FX trading volumes soaring as volatility returns – GBPUSD nearing 1.60, EURUSD above 1.14


LeapRate Exclusive… LeapRate has learned, in discussion with a number of leading executives at forex brokerage firms, that trading volumes have spiked following recent weakness in the US Dollar, and increased volatility across most major currency pairs. As such, we are likely to see higher trading volumes being reported next month.

EUR/USD has shot back up this month as fundamentally much of the latest ‘grexit’ noise has already been priced into the currency pair. Further, many economists see this 5+ year development as a positive thing for the Euro should Greece resort back to their own sovereign currency.

Technically speaking, on the monthly charts May saw a bit of a hesitant Doji candle signaling a potential reversal of fortunes for the Eurodollar as you can see in the chart below. We now sit above the 1.14 handle, and we wouldn’t be surprised to catch a further rally back above 1.15 in the wake of this mornings news coming from the Fed.

 

eurusd
Chart courtesy of MT4. Click for larger view.

 

Of course, the elephant in the room being what will the Fed do regarding interest rates. Many have predicted rightfully that they see the Fed delaying any hikes, which would be slightly negative towards the dollar in the near term. Funny as just a few months ago sentiment was quite the opposite as commentators beat the rate hike drum. However, the latest on the central banking front from Janet Yellen’s Federal Reserve struck a dovish tone this morning and emphasized that rate hikes will come at a “slower pace than expected.”

Another exhaustion sign for the dollar we can see in the USD Index, which peaked back on March 13th, 2015 at its 52 week high of 100.39. We are since down -6.64% from this date at the time of this writing sitting at 93.73. Viewing the USD Index chart below you can witness a weak but visible head and shoulder pattern in development which also signaled a potential fall as the dollar’s impressive relative strength of the past year might look to take a breather as the macro environment adjusts.

 

USD Index, Courtesy: BarChart
Daily 6-Month USD Index Chart as of June 18th, 2015, Courtesy: BarChart

 

Also to note is GBP/USD which has seen the largest relative weakness against the dollar in the past year. Now GBP/USD has seen the same trend take place…snapping back in ascension against the dollar in June faster than its recent up and down 600 pip swings from prior months creating a volatile daily trading environment.

 

Daily One-Year GBP/USD Chart as of June 18th, 2015, Courtesy: BarChart

 

Has your trading increased this month as the dollar shows increased volatility? Are you an IB seeing increased commissions? Let us know in the comment section below.

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FX trading volumes soaring as volatility returns - GBPUSD nearing 1.60, EURUSD above 1.14

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