FX option expiries on August 12 include important levels for EUR/USD and USD/CAD. The EUR/USD expiry is at 1.1650, which isn’t linked to any technical indicators, suggesting it may have little impact. Traders are waiting for the US CPI report before making significant actions. Similarly, the USD/CAD expiry is set at 1.3750, close to the 100-hour moving average at 1.3754. Because of this, trading activity might be slower until the inflation data is released. Overall, a quieter currency market is expected until we have the US inflation report.

Impact of Today’s Option Expiries

Once the inflation data is out, traders will focus on what it means for the Fed’s future decisions. Today, August 12, 2025, we have some big option expiries, including EUR/USD at 1.1650 and USD/CAD at 1.3750. While these levels may affect trading temporarily, they are not the main market driver. The key focus is on the upcoming US CPI inflation report. The market is anxious for the results, with expectations for July’s year-over-year inflation to be around 3.1%. This would be a slight decrease from June’s 3.3%, but still above the Fed’s target. With the Fed funds rate at 5.50%, any surprise increase could squash hopes for a rate cut in 2025.

Strategies for Derivative Traders

For derivative traders, short-term volatility is crucial. Implied volatility on short-term dollar options has already risen. A strategy like buying a straddle or strangle might be profitable if the CPI number varies greatly from expectations. This lets traders profit from significant price swings without risking a guess. If the inflation number exceeds 3.3%, we can expect a strong rise in the US dollar. In this case, positioning for the weeks ahead would involve buying USD calls or selling puts against currencies with a weaker outlook, like the euro. The recent German ZEW Economic Sentiment survey showed a disappointing -15.2, indicating that the Eurozone economy remains delicate. On the other hand, if the CPI falls below 3.0%, it could spark hopes for a Fed pivot, leading to a significant sell-off of the dollar. This would suggest buying calls on pairs like EUR/USD or AUD/USD for the following weeks. We might also consider buying puts on USD/CAD, especially after Canada’s recent jobs report showed an unexpected gain of 45,000 jobs, strengthening the loonie. Looking back, we recall the strong trends that followed major inflation surprises in 2022 and 2023. Today’s data could set the primary direction for the market for the rest of this quarter. A strong report would support the “higher for longer” narrative, likely keeping the dollar on an upward path. Create your live VT Markets account and start trading now.

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