Explain how shifts in the drivers of active currency strategies alter tactical positioning

Each strategy has its own triggers. For fundamentals, a revised fair value, higher real interest rates, a widening current account deficit or changed policy expectations move the target and the position. For carry, a narrowing yield gap shrinks the reward, and rising volatility or risk aversion is the signal to cut, since carry trades unwind fast as money flees to safe-haven currencies. For technical trading, a broken trend or moving-average crossover flips the signal. For volatility trading, implied volatility above the forecast of realised volatility favours selling options, and below it favours buying. Changing forward points also alter hedging costs. The trap is reacting slowly: carry and short-volatility positions can lose months of gains in days.