Forex options markets predict relatively limited currency price moves in the week ahead, but elevated medium-term volatility expectations point to breakouts in the future. Our DailyFX 1-week Volatility index is at its lowest since August, 2008 ahead of the holiday-shortened week of trading. A busy week of economic event risk through Wednesday suggests we may see sharp moves through the very short-term, but later-week trade will likely see a pullback in short-term price swings. There is always danger that illiquid market conditions lead to unexpectedly sharp currency movements, but such price action seems somewhat unlikely given exceedingly low implied volatility levels.

Originally posted here:
Forex Strategy Outlook: Volatility Likely to Remain Muted on Holiday-Shortened Week