Between April and May 2022, the global currency market entered a new era of volatility. The U.S. Federal Reserve’s aggressive monetary stance, combined with geopolitical tensions and inflation fears, triggered one of the most dramatic moves in forex since 2015.
The U.S. dollar index (DXY) surged to its highest level in two decades, while the euro fell close to parity, reaching levels unseen since the early 2000s. Investors abandoned riskier assets, moving capital into the safety of the greenback.
Commodities, emerging-market currencies, and even the Japanese yen suffered heavy losses. In a matter of weeks, the FX landscape shifted — and traders needed to adapt fast.
Wei Zhang’s Perspective: “You Don’t Fight Policy — You Trade It”
For Wei Zhang, a seasoned forex trader at Nexa Level X, spring 2022 was a lesson in respecting macroeconomic reality.
“A lot of traders tried to ‘fade the dollar,’ thinking it couldn’t go higher,” Zhang explains. “But when monetary policy tightens this fast, it’s not about what should happen — it’s about what will happen.”
Zhang shifted his strategy early in April, opening long positions on USD/JPY and USD/CAD, while shorting EUR/USD as inflation data confirmed the Fed’s hawkish path.
He also used a scaled entry system, adding positions gradually to reduce exposure while riding strong trends.
“The key,” Zhang says, “was to trade with momentum, not emotion. You don’t argue with the market — you align with it.”
By the end of May, Zhang’s disciplined approach paid off: he recorded a monthly gain of 8.63%, outperforming most currency funds that quarter.
A Turning Point for Forex
The events of spring 2022 became a defining moment for the forex market. For many traders, it was the first time they had witnessed such an intense, policy-driven rally of the U.S. dollar.
“That period reminded me that the fundamentals always come first,” Zhang concludes. “If you understand central bank behavior, you can trade confidently — even in chaos.”
