Volvo Troubleshooting Questions? Ask a Mechanic for Answers ASAP
If there are no visable signs of leaks, it sounds like the coolant is leaking internally in the engine and coming out the exhaust. You need to have a dye test done on the vehicle to determine if there is a leak internal. The head gasket is the most likely cause of this problem.
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So you have discovered a leak, now you just need to fix leak and refill coolant and this should correct your overheating problem.