The FX option expiries for September 11 include EUR/USD at the 1.1700 level. This could attract price movement before the European Central Bank (ECB) meeting and the US Consumer Price Index (CPI) report. These events are significant for the markets, suggesting limited activity until their release. There is also a USD/JPY expiry at the 147.50 level, close to the current 100-hour moving average of 147.51. However, this is not expected to greatly affect price action, as the pair is still ranging. The US inflation data later in the day is likely to be the main driver of market behavior.

Market Focus and Expectations

The EUR/USD expiry at 1.1700 may act as a price magnet this morning. But the key focus is on the US CPI and ECB announcements later today, which will set the direction for the coming weeks. Currently, markets see a 70% chance that the Federal Reserve will keep rates steady at their next meeting, a probability that may change significantly after the inflation data is released. The US CPI report for August is expected to show headline inflation cooling to 3.1% year-over-year, down from 3.4% in July. If the number meets or falls below this expectation, it could reinforce the belief that the Fed’s tightening cycle is over, putting downward pressure on the dollar. On the other hand, a surprising increase could spark renewed bets on another rate hike before the end of the year and lead to significant market fluctuations. For USD/JPY, the 147.50 expiry level is not as critical compared to US interest rate expectations. During the 2023-2024 period, there were heavy official warnings and intervention concerns in this same price zone, but the situation has changed since then. With the Bank of Japan still keeping a generally accommodative policy, the direction for the pair will depend on whether US inflation data can lower Treasury yields.

Implied Volatility and Market Reactions

Due to these important events, implied volatility in the FX options market has increased. One-week volatility for EUR/USD has risen to over 8.5% this morning. This indicates that traders are preparing for a significant move out of recent ranges. Therefore, we should expect choppy price action around 10 am New York time, as larger market players position themselves for today’s main events. Create your live VT Markets account and start trading now.

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