The implied volatility levels for major forex pairs are as follows: – **EURUSD:** Resistance at 1.17600 and support at 1.16600. – **USDJPY:** Resistance at 148.00 and support at 146.400. – **GBPUSD:** Resistance at 1.36100 and support at 1.3500.

Implied Volatility Overview

These levels come from 1-month implied volatility, acting as important support and resistance levels in the market. Combining implied volatility with tools like pivot points, Fibonacci retracements, or psychological levels helps traders find better entry points, profit targets, or stop-loss levels. Using data from implied volatility allows traders to back their subjective judgments with objective price ranges, improving overall trading decisions. The one-month implied volatility shows clear expected trading ranges. For EURUSD, the likely range is between 1.16600 and 1.17600 in the next weeks. This suggests that traders do not expect significant breakthroughs, focusing instead on stable movement ahead of the upcoming US inflation data.

Central Bank Impact

The tight range in EURUSD reflects questions about the Fed and ECB policies. Examining the central bank actions through 2024, the Fed’s prolonged high-interest stance has created a noticeable gap, which seems to be narrowing by mid-2025, with the recent US core PCE holding at 2.7%. Traders might consider selling short-dated strangles with strikes outside this range to earn premium, betting that the pair stays within the range until the next major event. For USDJPY, the expected range is between 146.400 and 148.00. This range shows the ongoing tension from the US-Japan interest rate difference, currently about 500 basis points, along with the risk of Japanese government intervention. Given the Bank of Japan’s careful approach since it ended negative interest rates in early 2024, buying call spreads to target the 148.00 resistance level might be a good strategy. The GBPUSD range is estimated between 1.3500 and 1.36100, reflecting uncertainty about the Bank of England’s next move. Recent UK wage growth data was higher than expected at 4.2%, putting pressure on the BoE to keep its tight policy despite a slowing economy. This situation makes a long straddle or strangle an intriguing option to capitalize on possible sharp moves in either direction after the next policy meeting. It’s important to remember that these data-driven levels are even more useful when paired with our technical analysis. For example, if the 1.16600 support for EURUSD also aligns with a key pivot point or a 61.8% Fibonacci retracement level from the Q2 2025 rally, our confidence in selling puts at that level greatly increases. This strategy uses market-priced probabilities to validate our trading ideas. Create your live VT Markets account and start trading now.

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