Watch Risks on these Key Currency Pairs Given Volatility Risk Ahead


  • Euro tumbles following surprise Greek news, volatility almost guaranteed
  • Forex volatility prices jump to their highest since “flash crash” of May, 2010
  • Our strategy-trading bias unclear given extensive market uncertainty

The Euro looks almost certain to see significant volatility in the week ahead, and traders should keep an eye on these pairs given uncertainty surrounding Greece.

A surprise announcement from the Greek government on Friday sent the Euro significantly lower at Sunday’s open, and the resulting confusion makes further volatility exceedingly likely ahead of a planned referendum on Sunday, July 5.

FX options traders quickly sent Euro 1-week volatility prices to their highest levels in five years as markets opened on Sunday night, and indeed broader expectations point to potential turbulence in the week ahead.

Forex Volatility Prices Tumble after Big Week, but Greece Negotiations Represent Key Risk

Watch Risks on these Key Currency Pairs Given Volatility Risk Ahead

Data source: Bloomberg, DailyFX Calculations

In many cases we would argue that the sharp jump in volatility prices might produce good market conditions for our volatility-friendly Breakout2 trading strategy. And yet the clear difficulty in this instance is that it is especially challenging to predict how markets will react to ongoing Greece-related headlines and the potential for a material market gap this coming weekend.

This isn’t to say there won’t be any trading opportunities ahead of the weekend’s referendum, but we would avoid outsized positions in the Euro—particularly against the safe-haven US Dollar, Japanese Yen, and Swiss Franc. Price action for the EUR/CHF is further complicated by the fact that the Swiss National Bank publicly announced it had intervened in order to protect against excessive CHF appreciation.

Expect more noise out of global central banks in what promises to be an eventful week for financial markets. Even beyond Greece, Thursday brings what is often the most-market-moving event in the US Nonfarm Payrolls report. It seems wise to keep risk tight ahead of a critical stretch for broader markets. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

NZD/USD jumps over 50 pips to print 29-month high on hints of RBNZ's remit change

NZD/USD rises to fresh highs since June 2018. New Zealand Finance Minister Grant Robertson hints at adding house prices to the mandate. Risk-on mood also favors the kiwi bulls amid a light calendar.

NZD/USD News

Gold in bearish consolidation below $1840, remains vulnerable

Gold (XAU/USD) is nursing losses in Tuesday’s Asian trading, having slumped 2% on Monday to reach the lowest levels in four months at $1831. Vaccine progress, stronger US data hammer gold prices. Focus on vaccine updates and risk sentiment for fresh impetus.

Gold news

AUD/USD advances above 0.73 on Biden transition news, mixed Aussie data

AUD/USD extends gains above 0.7300 amid mixed Australian trade data and the upbeat market mood. The risk sentiment got a boost following reports that the US GSA has started the formal Biden transition process. S&P 500 futures rise 0.50%. RBA Debelle's speech awaited. 

AUD/USD News

S&P 500 Futures looks to regain 3,600 as US GSA begins Biden transition

S&P 500 Futures gains half a percent in a fresh bid wave, nearing 3,600. Wall Street also marked upbeat performance in the last hours. Trump concedes defeat while ordering the GSA to start the transition. Odds that ex-Fed Chair Yellen will become Treasury Secretary, vaccine hopes favor the bulls.

Read more

Black Friday 2020 Discounts!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info

Forex Majors

Cryptocurrencies

Signatures