On August 5, FX option expiries center around EUR/USD, specifically between the 1.1500 and 1.1600 levels. These expirations coincide with important hourly moving averages, 1.1499 and 1.1589, which may affect price movements during European trading hours.

Impact of Economic Indicators

Traders can expect more action when the US session begins. The ISM services PMI may trigger additional trading opportunities. This highlights the impact of both European and US economic data on market activity. Today, Tuesday, August 5, 2025, we see large option expiries for EUR/USD between 1.1500 and 1.1600. These levels are attracting price movement, holding it between the 100-hour and 200-hour moving averages. This suggests that the pair may experience a consolidation phase in the near term. In the upcoming weeks, this sideways trading might persist, as both major central banks seem to be taking a wait-and-see approach. Recent data showed Eurozone HICP inflation for July dropped to 2.8%, giving the European Central Bank little reason to hint at any policy changes. This likely prevents the euro from making any big moves. In the US, the latest core PCE reading was 3.1% annually, within the Federal Reserve’s acceptable range. With no strong data pushing them, the Fed is also expected to remain cautious. This standstill in monetary policy between the two regions is limiting significant price movements in either direction.

Trading Strategies and Risks

For traders dealing in derivatives, the current low realized volatility makes selling options appealing. We think setting up short strangles outside the 1.1450 to 1.1650 range could be beneficial in the next few weeks. Implied volatility has been decreasing and recently reached its lowest level since late 2024, supporting this strategy. We have seen similar price behavior before, especially during 2018-2019, when policy uncertainty kept EUR/USD in a narrow range for several months. History suggests that low-volatility periods can last longer than expected. The main risk to this outlook today is the upcoming US ISM services PMI report. A figure significantly different from the forecasted 53.5 could introduce volatility. A strong number may challenge the 1.1500 support, while a weak number could drive the pair higher towards 1.1600. Create your live VT Markets account and start trading now.

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