| | Forex Strategy Outlook: Drops in Volatility Expectations Favor USD, JPY Weakness
| Continued declines in volatility expectations favor US Dollar and Japanese Yen weakness, pointing to further Euro and Australian Dollar gains through slower forex moves.
DailyFX+ System Trading Signals -It was another tough week for Breakout Opportunities and Optimal Entry trading systems on Japanese Yen pairs. The key difficulty here is the fact that the overwhelming long-term trend favors Japanese Yen strength , and the SSI filter continues to allow both systems to short the AUDJPY, EURJPY, and GBPJPY. Yet the past two weeks of price action have produced consistent JPY weakness, and these systems have attempted to go against short-term momentum. Given a sharp drop in volatility expectations, it seems imprudent to attempt to go against the grain and sell the AUDJPY, EURJPY, GBPJPY, and USDJPY. We'll tend to ignore such trades until we see a significant pickup in volatility expectations.
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