The global foreign exchange market, with a daily turnover of approximately $9.5 to $9.6 trillion, is experiencing a period of low volatility not seen in nearly two decades. The JPMorgan Global FX Volatility Index is near its lowest levels since 2024, while emerging-market currency volatility has remained below G7 levels for nearly 200 consecutive days, the longest streak since 2008.
As market movements stabilize, traders are shifting from directional bets to carry-trade strategies, which involve borrowing in low-interest currencies to invest in higher-yielding ones. This approach has yielded approximately 18% year-to-date through mid-July 2026, marking the largest increase since 2005. Relative-value strategies are also gaining popularity among market participants.
The trend was a primary focus at the TradeTech FX 2026 conference in Amsterdam, held September 15-17. The event hosted over 800 attendees, including more than 300 representatives from buy-side firms and corporations. Analysts attribute the reduced volatility to synchronized monetary policies among major central banks and the dampening effect of high market liquidity.
While hedgers benefit from lower options premiums and reduced hedging costs, volatility-focused trading desks, market-makers, and macro hedge funds face significant challenges. Some experts warn that current low volatility may mask systemic risks, noting that historical carry-trade unwinds, such as those during the 2008 crisis or the 2015 Swiss franc shock, have previously erased years of gains.
