There is just one key expiry level to take note of on the day, as highlighted in bold below.
That being for EUR/USD at the 1.1250 level, with the strike resting less than 30 pips above the spot price. The expiries here could act as a near-term magnet and potentially see the currency pair become more sticky around the level. That especially since the 23.6 Fib retracement level of the swing lower from August to October at 1.1254 is also keeping a lid on any short-term upside action.
The expiries could be relevant if the pair starts drifting higher towards 1.1250 with hedging activity potentially helping to keep price action anchored around the level. And if EUR/USD slips lower instead, there may still be some scope for a pullback towards the strike depending on how positioning flows play out.
In any case, the big caveat today is the US CPI report. With the inflation figures set to arrive just before the 10am New York cut, any significant surprise could trigger dollar flows strong enough to overwhelm the option-related influence.
As such, any influence from the expiries today will only likely be most noticeable if the inflation numbers don’t deliver any major surprise. Otherwise, a sharp inflation-driven move could easily see EUR/USD break away from the strike and leave the expiries with little influence on the broader direction.
For more information on how to use this data, you may refer to this post here and/or refer to the Q&A below.
This article was written by Justin Low at investinglive.com.
