The FX option expiries for July 21 at 10am New York time highlight a few key items. The main focus is on the EUR/USD pair at the 1.1600 and 1.1640 levels, which surround the 100-hour moving average at 1.1623. Right now, the pair is influenced by important hourly moving averages. The expiries are likely to limit price movements during European trading.

Technical Indicators Impact

The 200-hour moving average, at 1.1660, serves as a ceiling, restricting upward movement last Friday. For more information on using this data, additional resources are available online. Large option expiries often act like magnets for currency prices, reducing short-term movement as the market gravitates toward these levels. According to Low’s analysis, these technical points can shape the day’s trading range. This “pinning” effect is a pattern to monitor around significant psychological levels in the coming weeks. The 1.1600 level mentioned earlier is now in the past, with EUR/USD currently trading around 1.0730. Recent data shows important option barriers at 1.0700 and 1.0800, likely establishing new boundaries for price movement. These levels reflect new economic data indicating US core inflation is steady at 3.6%, while Eurozone growth forecasts have been lowered to 0.8% for the year.

Central Bank Policies Influence

The notable drop from the price points discussed shows a long-term trend influenced by different central bank policies. This trend is expected to continue since the Federal Reserve is indicating fewer rate cuts compared to the European Central Bank. As a result, we’ll be using derivative strategies that benefit if the pair stays within this new, lower range. With the market’s one-month implied volatility for EUR/USD near yearly lows of about 5.5%, option premiums are low. This situation offers a chance for us to establish positions that profit from a sudden increase in volatility. We plan to buy strangles—options strategies using both puts and calls—to prepare for a breakout ahead of upcoming central bank press conferences. Create your live VT Markets account and start trading now.

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