Wisdom Financial APP has learned, someForex tradingEmployees are starting to bet that after the re-election of President Donald Trump to the White House, the policy agenda of the new US government he leads will cause daily trading volumes of up to $7.5 trillion in the forex market to experience severe volatility. The Wall Street hedge fund traders gathered in the forex trades are no longer limited to holding US dollar cash to deal with the wave of 'Trump trades' that may lead to a trend of US dollar appreciation. Currently, they are flowing into options that can achieve significant profits when forex market volatility intensifies, meaning they are betting that the US dollar against multiple currencies may present a 'stock-like sharp rise trend' shortly after Trump's inauguration.

After years of relatively mild fluctuations, the 'one-year volatility rate indicator' of the euro against the US dollar skyrocketed significantly after Trump announced his election victory, directly hitting a nearly 2-year high last week. To cope with the more severe volatility that may come after Trump officially returns to the White House, hedge funds are massively buying options contracts. If there is an intensification in the forex rates of the dollar against these currencies, these contracts will gain huge profits, and strategists have also made significant revisions to their exchange rate forecasts.

Although it is currently unclear at what speed the Trump administration will implement policies that could have a significant impact on currencies like the euro, such as the scale of trade tariffs on important markets like Europe and China, forex traders seem increasingly certain that 'unpredictability' will be a key feature during his term. In addition, how countries will respond to the policy measures brought by Trump, and what kind of impact these countermeasures will have on the forex market, are unknown factors. These uncertainties are also prompting funds to flow into the US dollar as a safe haven.

"This is an environment that makes the dull forex market particularly interesting." Julian Weiss, G-10 Forex Options Director at Bank of America, stated, adding that the demand for forex hedging products has rebounded. "Any hedge fund globally, even if they have long focused on stocks, suddenly they also see the possibility of facing significant currency exposure fluctuations."

This trend marks a sharp shift in the relatively calm forex market over the past few years, when major central banks around the world successively raised and lowered interest rates. Although the US dollar index experienced a sharp rise, the US dollar quickly fell back following a cycle of interest rate cuts, and during this period, volatility remained at a low level, ushering in a relatively calm period in the forex market.

Now, with Trump re-elected as the President of the United States, the "America First" and "MAGA" policy frameworks are once again sweeping through. It is expected that these policies will exacerbate domestic inflation in the United States, drive the 10-year US Treasury yield curve upwards, continuously affecting traders' pricing logic. Traders generally expect the "policy gap" between major central banks such as the Federal Reserve and the European Central Bank to widen, with the Fed maintaining high interest rates while the ECB intensifies interest rate cuts due to economic pressure. This will cause major currency pairs such as the Euro-Dollar to experience severe fluctuations globally, eventually breaking away from the range of fluctuations seen for many years.

MAGA, short for "Make America Great Again," can refer to the core theme of all policies led by the Trump administration, and is also used by some mainstream media to refer to Trump himself and fervent Trump-supporting American voters.

After the US election, Wall Street commercial banks have successively lowered their forecasts for the Euro-Dollar currency pair, expecting the pair to fall to parity within the first few months after Trump takes office, predicting the Euro to US Dollar to fall to 1:1.

"We expect that the policies Trump may introduce will create broader space for macroeconomic differences, leading to larger fluctuations in the forex market, causing the US dollar to fluctuate significantly against multiple currencies in a short period of time." Dominic Bunning, G-10 Strategy Director at Nomura Securities, stated.

Market forecasts that the US dollar will strengthen rapidly after Trump takes office, supporting their reasons for increasing hedging costs, as the correlation between the US dollar and the volatility in the forex market is strongest when there is extreme demand for the US dollar.

NatWest Group Plc's options trading team stated that the 'Trump trade' activity in the forex market mainly focuses on betting on significant weakening trends in the Euro, Australian Dollar, and Japanese Yen against the US Dollar, while UBS Group AG traders pointed out that betting on the general weakness of Asian currencies is also a popular trade.

"From the perspective of volatility, sovereign currencies considered to be most affected by tariffs and Trump policies will continue to be favored in 'volatility trading'," said Henry Drayson, Co-Head of Foreign Exchange Options Trading at NatWest Group.

Of course, there is a risk that in the market pricing ahead of Trump's inauguration, the anticipated forex market volatility by traders has largely been absorbed, to the extent that the long-term forex market fluctuations may be relatively mild compared to expectations. The forex market may continue a period of relatively mild volatility pricing trend before Trump takes office. This is roughly what happened in Trump's previous presidential term, partly due to policies like trade tariffs taking much longer from planning to actual implementation than the market expected, leading to a long and relatively calm digestion period in the market before tariff policies were enforced, avoiding the expected short-term drastic fluctuations.

This time, the Republican control of both the House and the Senate could mean that the implementation of his planned policies will be more intense and rapid. In addition, the daily exchange rate fluctuations caused by Trump's habit of regularly tweeting could also lead to a surge in short-term forex market volatility, a scenario that traders vividly remember from the previous term.

Shahab Jalinoos, Global Forex Research Director at UBS, stated: "2025 will be a year of volatility and uncertainty in the forex market. We do not yet know what will happen after Trump takes office, and there are many contradictions and strong opposing emotions."