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Which forex session is most volatile?

The foreign exchange market is open 24 hours a day, 5 days a week, and it is divided into four major trading sessions: the Asian, European, North American, and Pacific sessions. Each session has its unique characteristics, and the volatility of the forex market varies depending on the time of day, economic events, and trading volume.

The forex market is the most volatile during the overlap between the European and North American sessions, which occurs between 8:00 am and 12:00 pm EST. This period is also known as the “Power Hours.” During this time, traders from Europe and the United States are active in the market, resulting in high trading volume and increased volatility.

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The European session starts at 3:00 am EST and ends at 12:00 pm EST. It is the most active session, as it involves the major financial centers of the world, including London, Frankfurt, and Paris. The European Central Bank (ECB) and the Bank of England (BOE) release economic data and monetary policy decisions during this time, which can have a significant impact on the market.

The North American session starts at 8:00 am EST and ends at 5:00 pm EST. It is the second most active session, as it involves the major financial centers of New York and Toronto. The release of economic data, such as the Non-Farm Payrolls and Gross Domestic Product (GDP) reports, can cause significant volatility during this time.

During the overlap between the European and North American sessions, traders from both regions are active in the market, resulting in higher trading volume and increased volatility. This period is characterized by sharp price movements, as traders react to news and events from both regions. It is also the time when most major currency pairs, such as EUR/USD, GBP/USD, and USD/JPY, experience the highest trading volume.

Apart from the European and North American sessions, the Asian session is also known for its volatility. The Asian session starts at 7:00 pm EST and ends at 4:00 am EST. It involves the major financial centers of Tokyo, Hong Kong, and Singapore. The Bank of Japan (BOJ) releases monetary policy decisions during this time, which can impact the market. However, the trading volume during the Asian session is lower compared to the other sessions, resulting in lower volatility.

The Pacific session is the least volatile of all trading sessions. It starts at 5:00 pm EST and ends at 2:00 am EST. It involves the major financial centers of Sydney and Wellington. The trading volume during this time is also low, resulting in lower volatility.

In conclusion, the forex market is most volatile during the overlap between the European and North American sessions, which occurs between 8:00 am and 12:00 pm EST. During this time, traders from both regions are active in the market, resulting in high trading volume and increased volatility. Traders should be aware of the economic events and news releases during this time, as they can impact the market significantly.

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