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Forex pairs in this Article » EUR/USD, GBP/USD, USD/JPY
- Dollar starts the year higher as volatility comes back in an important way-Our focus shifts towards Dollar-buying via our Breakout2and Momentum2systems- Forex volatility prices and rising US Treasury yields keep us focused on Dollar gains

The US Dollar has started the year with strength, and a sharp shift in market dynamics suggests the USD may continue to gain versus the Euro and other counterparts. Why?

Forex Volatility Prices Have Bounced Notably, Favoring Dollar Gains

forex_trading_us_dollar_forecast_to_gain_further_body_Picture_1.png, US Dollar Forecast to Gain on Key Market ShiftSource: OTC FX Options Prices from Bloomberg; DailyFX Calculations

We wrote last week of the significance of a major shift in Fed policy and the importance of the turn in volatility in FX markets: both are likely to be US Dollar-positives. So how do we trade it?

Dow Jones FXCM Dollar Index Remains Heavily Correlated to Volatility

forex_trading_us_dollar_forecast_to_gain_further_body_Picture_2.png, US Dollar Forecast to Gain on Key Market ShiftThe volatility shift favors a stronger dollar, and as such the obvious choice would be to get long the Greenback versus major currencies. Our volatility-friendly Breakout2 system and trend-following Momentum2 strategies are in a good position to buy into US Dollar strength.

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DailyFX Individual Currency Pair Conditions and Trading Strategy Bias

forex_trading_us_dollar_forecast_to_gain_further_body_Picture_3.png, US Dollar Forecast to Gain on Key Market Shiftforex_trading_us_dollar_forecast_to_gain_further_body_Picture_4.png, US Dollar Forecast to Gain on Key Market ShiftAutomate our SSI-based trading strategies via Mirror Trader free of charge

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