There is just one key expiry level to take note of on the day, as highlighted in bold below.
That being for USD/JPY at the 158.00 level, with the spot price sitting less than 15 pips away from the strike.
The expiries are sizable, so the large option interest could provide a reason for price action to remain attracted to the area if the pair stays nearby.
But from a technical perspective, the 200-day moving average at 158.47 will present the more critical ceiling region for price action. That is what held back the USD/JPY advance yesterday in bringing price back below the 158.00 level.
That being said, the other and more important driver of trading sentiment today will be the US jobs report. A sufficiently strong move in Treasury yields and the dollar following the data can easily overwhelm option-related flows. As such, I would treat the expiry level as more of a potential short-term magnet rather than a hard ceiling or floor.
Besides that, intervention risks will also be a consideration for USD/JPY price movements. If the pair does run up too far, too fast then we could see traders heed caution and err on the side of profit-taking in case Tokyo or Washington decides to step in and send a message. So, that could also lead to added volatility as the week winds down.
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.