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Dollar Calm Reshapes Currency Trading Strategy

Diminished volatility in the U.S. dollar is redirecting trading activity in the $9.5 trillion daily currency market. Traders are shifting toward carry trades and relative value positioning as traditional volatility-based approaches yield fewer opportunities. Meanwhile, currency markets remain vigilant over potential intervention risks. Japan's yen declined 1% this week to 158 per dollar, keeping traders alert for central bank action. The shifting landscape has prompted major asset managers to reassess dollar holdings. Taiwan's largest pension fund reduced U.S. currency exposure amid broader concerns over dollar asset valuations. The reallocation signals growing caution among institutional investors about sustained dollar strength and reflects widening debates over optimal currency positioning in an environment of reduced near-term trading volatility.