On July 8, an important forex option expiry for EUR/USD will occur at the 1.1700 level. This could help prevent further declines for the pair, which is currently trading just below its key hourly moving averages. Despite the recent rise of the dollar, EUR/USD has climbed over 8.5% since early April. This shift reflects the impact of the recent tariffs, a situation that is expected to last until at least August 1.

Impact of Options Expiry

Large expiries at the 1.1700 level this week may affect price changes or challenge sellers, depending on market conditions. The scheduled expiries are €3.0 billion on Wednesday, €1.4 billion on Thursday, and €1.5 billion on Friday. These amounts may change as we get closer to the expiry dates. This means EUR/USD is balancing around the 1.1700 mark. The move above this level earlier this quarter was not coincidental; it followed a decline in the dollar due to changes in trade policies and lower yield expectations. Since then, the pair has been moving more cautiously, settling into a tighter range just below the short-term averages. This is significant because those moving averages act as informal targets in technical trading. With large options at 1.1700 on several days, the pair is like a boat gently bumping against a solid dock. These options can create friction points where the price gets sticky. We don’t think the price won’t move; instead, we recognize that big volumes can change how and where it moves. The billions in expiries clarify some of that reasoning.

Observations and Strategy

Wednesday’s total is €3.0 billion, which should attract traders’ attention. While the figures for Thursday and Friday are smaller, they’re still significant. Having option protection near a round number may encourage hedging, which can change spot demand. If there’s pressure to keep spot levels steady near that expiry, trading positions might reflect that, and if prices drift too far from the strike level, we could see defensive adjustments. In the upcoming week, we’re not looking for extreme movements. Instead, the balance around the 1.1700 level will be key. With open interest spread out but favoring early in the week, trading flows could show hesitance to abandon that level quickly. If forward rates stay steady and volatility remains low, maintaining prices near that level into expiry may suit the large holders, and their strategies are not random. We also see that the euro’s initial strength this month appears to be slowing. Moving back below key averages isn’t a cause for panic, but it does suggest that momentum is no longer one-sided. This coincides with a quieter week from policymakers, where low-impact macro releases and no major rate announcements are expected. This doesn’t mean there will be no movement; it suggests that flow may stem more from positioning and expiry-driven behavior than wider narratives. Midweek attempts to push above 1.1700 may face resistance unless there’s a fundamental reason for the markets to challenge those open contracts. We often see increased volume, particularly near the New York cut, which can create brief movements before prices return to their ranges. If this timing stays consistent, we might spot short-term trading opportunities. Holdings in futures and sentiment surveys indicate that long-term bets haven’t changed significantly. Options ahead of expiry offer short-term insights. Traders making adjustments ahead of Wednesday may reveal intentions, and we should pay attention to the volume from these actions, as real positioning often shows when hedging costs rise. As always, we need to stay alert to any unexpected data or comments from global figures that could impact stability. Unscheduled announcements, especially from policymakers or central banks, tend to be volatile moments. In the absence of such news, the upcoming flows may reflect the influence of the large option strikes. Therefore, strategies may favor responses to movements rather than predictions, and positioning near expiry typically benefits from simpler setups rather than bold directional bets. Schaefer’s recent note on seasonal euro strength is worth considering, even if it seems priced in for now. The short squeeze that drove us higher earlier now appears to have unwound. Meanwhile, Wallace’s insights on commercial hedging at important levels highlight a quieter technical outlook ahead of Thursday. When market sentiment is this analytical, less often becomes clearer. We’re not chasing movements; we’re observing how options shape the market structure. Short-term trades may look to test peaks and anticipate temporary holdings. Monitoring intraday volume around the New York expiry provides clues on whether the markets respect these levels or are preparing to break free from them. Create your live VT Markets account and start trading now.

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