Here is a trick in the Forex market that allows you to milk massive trends COT data measured in Z-scores Every year 1 or 2 currency gets ahead of itself. Either buyers over buy or sellers sell in the hole. Essentially Trading at z-score extremes. The subsequent position squaring trumps any piece of news, as everything is on fire sale until inventory is offloaded.
See Eurusd in 2018 and 2021 again , more recently July/August.
There are 3 triggers to enter these trades and only 2 of them have to be present for a high probability move 1- Economic underperformance relative to the other currency. In the example above Eur data disappointing vs. Us exceptionalism.
Can you see where it all went wrong for Eur and how wel US was doing
2- Central Bank divergence. When one CB is dovish ie cutting rates or a weak hold vs a hawkish central bank ie raising rates or holding with a lean to raise again. See BOJ vs. The rest of the world. Yen getting absolutely trashed.
3- Yield divergence. When the bond yield of Germany is trending down vs US treasury yield going. This was triggered on the 19th of July when treasury announced they will oversupply the notes market and yields catapulted higher
