The US dollar rose initially but then dipped slightly after comments from Fed governor Waller suggested a possible rate cut in July. However, futures for Fed funds show a 97% chance that there won’t be a rate cut this month. This stability indicates that any decline in the dollar may be limited. In terms of EUR/USD, option expirations might reduce market volatility. The 100-hour moving average at 1.1634 is a key technical point to watch, while expirations at 1.1650 may also impact market behavior.

GBP/USD Expirations and Effects

For GBP/USD, expirations are around the 1.3400 level, close to recent daily lows. While these levels aren’t critical technically, they could reduce immediate downside risk before they expire later today. If you’re looking for more information on option contracts and their effects, detailed guidance is available. We are also providing ongoing visual updates for better clarity. Your feedback is welcome. We think the market’s reaction to one official’s dovish comments is an overreaction that will likely fade quickly. According to the CME FedWatch Tool, there’s an 88.5% chance that the Federal Reserve will keep rates steady at its next meeting, suggesting that most believe a rate cut is not on the horizon. Thus, any dollar weakness from these comments should be seen as a temporary dip rather than a new trend. For EUR/USD, this means price movements will likely remain limited in the short term due to significant options interest. Large expirations are clustered around the 1.0750 level, which may exert influence on the spot price. We’re also monitoring the 50-day moving average now at 1.0790, as breaking through that level is essential for any sustained price movement.

GBP/USD Option Levels

In GBP/USD, a significant block of options is set to expire around the 1.2700 mark. This level is psychologically important and is near last month’s highs, suggesting it may cap any rallies soon. We view these options as likely to reduce upward volatility before they expire. Historically, times of uncertainty before a potential Fed policy shift, like late 2018, see a spike in implied volatility. The MOVE Index, which measures bond market volatility, has recently risen over 15% from its yearly lows, indicating that the market is preparing for larger price fluctuations. This suggests the current calm in currency markets might not last. Given this situation, we believe selling options to earn premiums is risky right now. Traders should consider buying option structures like straddles or strangles on major dollar pairs. This strategy positions a portfolio to benefit from the expected increase in volatility in the coming weeks, regardless of the price direction. Create your live VT Markets account and start trading now.

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