Why are the ranges narrow?

The ranges are defined each day by an upper level (blue line) and a lower level (red line). If the currency pair price moves above or below these levels, a live trading signal is triggered. The upper and lower level are calculated by looking at prices prior to 09:00. The volatility (a measure of how much price varies) seen during this period affects the range between the upper and lower levels : the range increases as volatility increases. Thus today we are seeing narrow ranges because volatility is low.

The low volatility is probably due to today's scheduled USA economic data releases regarding production (Durable Goods) and employment (Jobless Claims) at 13:30 GMT. The market is sensitive to the latter release and therefore currency prices will likely continue to remain "quiet" this morning as traders wait for the Jobless Claims number which will help them assess whether the US economy is in recovery or not.

You will have seen in the past that currency prices can "spike" or suddenly move 100 pips or more when important economic data is released. This happens when the market is "surprised" with data that is very different to the expected number i.e. the released data differs greatly from the consensus forecast by economists, traders and other market professionals.

You can keep up to date with the release of economic data by visiting the Useful Links section on our blog and clicking on the World Economic Calendar. Click HERE to see todays schedule.