(Bloomberg) -- Currency traders are betting that Donald Trump’s policy agenda is about to jumpstart volatility in the $7.5 trillion-a-day foreign exchange market.

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After years of benign moves, a gauge of one-year volatility on the euro-dollar exchange rate surged after the election. Hedge funds are scooping up options contracts that pay out if currency swings increase and strategists have dramatically revised their currency forecasts.

While it’s not yet clear how quickly Trump will implement policies such as trade tariffs that could cause significant pain to currencies like the euro, investors are pretty certain that unpredictability will be a major feature of his term in office. There’s also the unknown factor of how countries will respond to Trump’s measures and what impact those countermeasures will have on markets.

“It’s an environment where FX becomes particularly interesting,” said Julian Weiss, head of G-10 vanilla FX options at Bank of America, adding that demand for longer-term products has picked up. “Any hedge fund across the globe, even if they have an equity focus, all of a sudden we’re seeing FX exposure being put on.”

The trend marks a sharp turnaround from the past few years when central banks raising and then cutting interest rates in tandem ushered in a period of extreme calm. Now, with Trump’s America First policies expected to fuel inflation at home, traders expect a widening policy gulf between the Federal Reserve and its peers, which will break major currency pairs like the euro-dollar out of their tightest range in years.

Banks have slashed their forecasts for the currency pair in the wake of the US election, anticipating a slide toward parity.

“We would expect Trump’s likely policies to create greater room for macro-economic divergence, which would lead to bigger FX moves,” said Dominic Bunning, head of G-10 strategy at Nomura.

Market projections for a stronger dollar under Trump also support the case for elevated hedging costs because correlation between the greenback and volatility is at its strongest when the US currency is in high demand.

Options traders at NatWest Group Plc say activity has been particularly concentrated around bets on euro, Aussie dollar and yen moves versus the dollar, while traders at UBS Group AG note that wagering on Chinese yuan weakness has also been a popular play.