Investment Risks in Open Markets

The markets and instruments mentioned here are for information only; no recommendations are being made. It’s crucial to do your research before making any investment decisions. Be aware that investing in open markets comes with risks, including the possibility of losing your entire investment. As we approach the expiration date on May 22, we may see increased volatility around key price levels, especially in major currency pairs where large options are about to expire. These levels can act like magnets, drawing spot prices closer as positions are adjusted. In the case of EUR/USD, there is a significant interest of 2.1 billion euros at the 1.1175 level, which is much larger than the usual daily expirations. Such high volume can create a gravitational pull on prices if they trade near this level, especially when traders are adjusting their risks. If the price moves toward 1.12, we could see additional resistance or support depending on market flows. The higher level at 1.1400 has a 751 million euro interest as well, but it has less impact unless strong price movements occur leading into the expiration.

Recognizing Positioning Pressure

Sterling traders should keep an eye on the 778 million GBP set to expire at 1.3260. This level is slightly above current market prices, suggesting that a slight upward movement may happen, especially in a bullish market. The same logic applies to the yen market. Although the 601 million USD at 143.50 isn’t overly significant, it can still provide resistance or support if prices move up. The situation with USD/CHF looks different. The 598 million around 0.8525 could offer minor technical resistance, but it doesn’t have the volume needed to be a strong attractor. It’s worth considering, especially on days with low liquidity. For AUD/USD, while the volumes of 204 million and 286 million AUD are lower compared to other pairs, the range between 0.6100 and 0.6700 is important. The lower end may serve as a support level during risk-off periods, while reaching the higher level of 0.6700 will likely require major economic changes. That upper level is currently out of reach without a significant market impulse. Create your live VT Markets account and start trading now.

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