FX option expiries on September 19th at 10 am New York time highlight two key levels: EUR/USD at 1.1750 and 1.1800. Currently, prices are moving within these levels, shaping the trading range for Europe as the markets react to recent announcements from the Federal Reserve.

Dollar’s Modest Recovery

The dollar is showing a modest recovery following a rise in bond yields overnight, which have now stabilized. The significant option expiries at 1.1750 and 1.1800 are keeping EUR/USD in a tight range today. This situation is expected as we process the Fed’s more aggressive tone from this week. This stability is just a calm before the market likely returns to its previous trend. It’s important to look past this temporary calm. The Fed’s tough stance comes in response to recent inflation data. The August 2025 CPI report revealed core inflation remains high at 3.4%. This has pushed the US 10-year Treasury yield back up to 4.5%, supporting the dollar. Meanwhile, the European Central Bank faces a stagnant economy, as recent German PMI data dropped to its lowest level in over a year.

Clear Policy Divergence

The contrasting policies between a strong Fed and a cautious ECB suggest that EUR/USD might trend lower. We saw a similar pattern in 2022 when Fed rate hikes led to stronger dollar performance against the euro. The current pause near 1.1750 might present a good opportunity to prepare for a drop. For traders, this calm period is a chance to get ready for upcoming volatility. Buying put options with strike prices below 1.1700 for the coming weeks could be a strategic move to profit from a potential decline after today’s expiries. The limited price movement could keep implied volatility low, making such positions more affordable. Alternatively, selling call options or using bear call spreads with a cap around the 1.1850 level could be wise. This strategy assumes that strong resistance and underlying economic challenges will limit any notable rallies. The aim is to collect premiums while awaiting the larger downward trend to take hold due to interest rate differences. Create your live VT Markets account and start trading now.

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