There are just a couple of key expiry levels to take note of on the day, as highlighted in bold below.
The first ones are for EUR/USD at the 1.1075 and 1.1100 levels, with the strikes keeping within 25 pips of the spot price. The former is even sitting directly on where price is trading currently, already being of particular relevance.
With the greenback continuing to go from strength to strength this week, dollar sentiment remains the biggest driver of how EUR/USD will trade as get into the thick of things in the second half of the week. The drop since yesterday is already seeing the pair run to fresh lows since May last year, with a break below the 200-week moving average of 1.1095 also in focus.
The expiries between 1.1075-00 may act as a bit of a magnetic region ahead of the cut, that is should the dollar see some scope for a pullback today. But if dollar gains continue to run, don’t expect much of any impact from the expiries to really hold things back. There really isn’t much support for buyers to lean on before we get to the 1.1000, at least from a technical perspective.
Then, there is one for USD/JPY at the 159.50 level. It isn’t the most sizable of expiries and with the pair nudging back closer to the 160.00 mark, the interest is mostly on the figure level currently. Besides that, intervention risks are also in focus and any verbal intervention or direct action from Tokyo officials will do much more in terms of impacting USD/JPY price action compared to the expiries today.
As such, I see the impact of any pull or attraction from the expiries at 159.50 as being rather minimal considering the trading conditions and backdrop.
Lastly, there is one for GBP/USD at the 1.3250 level. That is more or less where the spot price is trading now, so it does put the expiries immediately in focus going into European trading.
But much like EUR/USD, dollar sentiment remains the bigger driver at this stage and will have a stronger influence on how GBP/USD behaves in the session ahead. Still, the expiries could act as a bit of a magnet amid two-way hedging flows in keeping price action tighter – that is if we do get a more tentative mood in European trading.
That being said, GBP/USD is threatening a break of its 100-week moving average at 1.3275 and that could accelerate a downside push especially if sellers are moving with conviction to also break below the supportive region closer to 1.3200 to close out the week. So, keep a watchful eye on that.
For more information on how to use this data, you may refer to this post here and/or refer to the Q&A below.
