Like a phoenix rising from the ashes, the recent resurgence of currency alpha after a decade-long absence is grabbing attention. The foreign exchange market, which is the largest and most liquid financial market in the world with trillions of dollars traded every day, has witnessed a reinvigoration of two underpinning strategies of currency alpha: momentum and carry. After a period of subdued returns following the Great Financial Crisis (GFC), the emergent macroeconomic landscape following the pandemic has produced a rich opportunity set for trading in FX markets. In this paper, we look at the past three decades and shed light on the themes that may have contributed to the recent surge in performance.
