Economics faculty and former students overturn decades of research on the supposed irrationality of currency markets

Two economics professors (Michael Goldberg and Deniz Ozabaci) and two former PhD students (Olesia Kozlova and Peter Sullivan) have completed research which overturns a decades-old puzzle that currency markets are driven by technical trading and bubbles rather than risk and rational forecasting. Their findings convey that the puzzle is an artifact of insufficiently recognizing a key feature of asset markets:  unpredictable instability. The research is forthcoming in Critical Finance Review and titled "The Instability of the Bilson-Fama Forward Rate Anomaly".