**USD/JPY Moving Averages** The USD/JPY pair is currently trading between its 100 and 200-day moving averages, ranging from 146.03 to 148.67. This range allows for flexibility until a significant market event occurs. The market is anticipating three rate cuts from the Fed by the end of the year, suggesting limited downside for the dollar in the short term. Last week’s August CPI report was softer than expected at 2.9%, which supports a trend of disinflation. Large EUR/USD option expiries at 1.1700 and 1.1725 may influence today’s price movements. Given this setup, now is a good time to explore options strategies for the upcoming weeks that predict a price increase. Implied volatility for EUR/USD is close to its lowest levels since spring 2024, making it cheaper to bet on a significant price move. Therefore, buying volatility might be a smart strategy. **Call Option Strategies** We suggest buying out-of-the-money call options or setting up call spreads aimed at the 1.1950 level. This strategy could provide a favorable risk-reward scenario, taking advantage of the market’s intention to rise after short-term expiries pass. The European Central Bank’s cautious approach to interest rates supports euro strength against a weakening dollar. For USD/JPY, the market remains in a balanced state, oscillating between 146.00 and 148.70. The drop in the US 10-year Treasury yield to about 3.8% limits any upward movement, while the Bank of Japan’s slow pace in normalizing its policy prevents sharp declines. This balance suggests continued sideways movement for the pair. Today’s expiries around 147.40 are small, so we should concentrate on the broader range that has existed since July 2025. This market environment favors strategies that sell volatility, as long as there isn’t a major new catalyst. Historically, quiet periods like this in 2023 often led to sharp breakouts, but for now, we remain within the established range. We see potential in selling strangles with strike prices set outside the key moving averages, perhaps below 146.00 and above 148.70, to gather premium. As long as USD/JPY stays within these boundaries without a significant policy shift from the Fed or the BOJ, this strategy should be effective. This allows us to benefit from the market’s lack of direction over the coming weeks. Create your live VT Markets account and start trading now.

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