There are a couple of key expiry levels to watch out for on the day, as highlighted in bold below.
The first ones are for EUR/USD at the 1.1450 and 1.1500 levels, both sandwiching the current spot price and keeping within close proximity. The two large expiries expiries effectively bracket the current price and could help keep EUR/USD price action more contained in the 1.1450 to 1.1500 region if there is no strong macro catalyst to shake things up in the session ahead.
The expiry levels above don’t tie to any technical significance but with the dollar settling down for a bit after the Fed, the expiries should still have some influence on price action or at least contribute to stickier price action in that range for today. That especially since the bond market is also keeping much calmer, with 10-year Treasury yields continuing to hold just under 5% for now.
Besides that, there is one for USD/JPY at the 157.00 level as well. With the yen weakening after the BOJ decision earlier, that puts the spot price right in proximity of the expiries. So, the 157.00 mark could be a potentially short-term reference point and could encourage choppier trade or some gravitational pull around the figure level heading towards expiry.
The much larger $5.5 billion at 155.00 is eye-catching, but at more than 200 pips away it is unlikely to have much bearing on today’s price action unless USD/JPY sees an unusually sharp reversal.
As always, just be reminded that these levels are best treated as short-term market context rather than directional signals. A meaningful macro catalyst, such as the bond market selling off again, can easily overwhelm the expiry-related flows.
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.