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Currency Traders Should Get Ready for Big Move in the Dollar

  • Past slumps in FX volatility have preceded big dollar moves
  • JPMorgan global currency volatility gauge at five-year low
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Currency traders should brace for a large move in the dollar, if past periods of low volatility are a guide.

Over the last 25 years, there have been three previous troughs in the JPMorgan Global FX Volatility Index. Each time, the U.S. Dollar Index has moved around 10 percent over the subsequent 6-months, according to data compiled by Bloomberg. The volatility gauge is currently trading at its lowest in 5 years.