Forex Wider Price Volatility

On a thinly traded forex market, prices of the currency majors would easily be susceptible to a variety of price action from some institutional players outside of the US. The celebration of the Labor day holiday is a clear example of market action before and after holidays which has proven to be significant moves where traders would not least expect to happen. A spill-over effect of last weeks movement would be made while price market will fluctuate on both directions to cover the real market sentiments. since the short trading week for the US investors and traders would be limited European markets would simply take the lead pace of any continuation of the directional trend for the EURUSD in particular with cross rates more favored to trade with.

The quiet yet vulnerable market conditions in Asia would follow this lead and by the start of the North American session at the opening after the holiday the much anticipated US Dollar may have continued to move lower thereby leaving most other US investors to be behind the price action. As it have closed lower last Friday for the USDX at the 82.03 even on a technical perspective shows that the trend lower is inevitable. The probability is greater for the USDX to go back to the 80.00-20 bp levels and no significant fundamental is present to say otherwise.

It is only now that some traders are looking at the possibility of the EURUSD to continue higher without saying that the most recent upward move was a simple correction and would rather wait for a selling opportunity. While that maybe true in certain ways, by the time that they would be convinced these traders would turn bullish by taking long positions and then the market would turn around lower for its corrective move. These market conditions would normally occur the few trading days thereafter a market holiday. And this has been based on almost three (3) decades of market trading the foreign currenies, financial futures and the precious metals market. Although, there are no sure fire guarantee that it will always happen but the probabilities that the market behavior will surely be in this mode.

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