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Is a Big Move in the Euro Coming Soon? – Currency Volatility at Record Low

October 4th, 2006 by Stephen Roman

A report from Dailyfx.com points out:

It is interesting to note that this is the tightest the bands have ever been for EURUSD (since the advent of the euro in 1999). Going back 10 years with synthetic prices, there are only two instances when volatility was this low – December 1996 and August 1998. Both instances led to breakouts within 2 weeks and moves of over 1,000 pips in less than 2 months.

If a directional play is too bold another way to play increased volatility is by using options. A long strangle will allow a trader to profit from increases in volatility without a huge premium.

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