The cash hedging of soon-to-expire FX option strikes may bolster any nearby support and resistance levels, and potentially have a magnetic effect on FX price action towards each day's 10 a.m. New York time (1400 GMT) cut expiry. It is therefore advantageous to know in advance where the larger strikes lie.

Date Strike Notional

(euros)

Monday 1.1600- 1.6bln

May 25 10

1.1635 1.4bln

1.1645- 1.6bln

50

1.1655- 395mln

65

1.1675 252mln

1.1695- 1.2bln

1.1700

Tuesday 1.1575- 1.3bln

May 26 85

1.1600 2.5bln

1.1610 436mln

1.1650 2.1bln

1.1695- 1.1bln

1.1700

1.1725- 1.4bln

30

1.1735- 804mln

40

1.1775 1bln

Wednesday 1.1550- 2.5bln

May 27 60

1.1570- 1.1bln

80

1.1600 761mln

1.1620- 907mln

30

1.1650- 1.5bln

60

1.1700 1.4bln

1.1715- 2.3bln

20

1.1725- 1bln

30

1.1740- 4.3bln

50

1.1795- 3bln

1.1800

Thursday 1.1700- 1.3bln

May 28 05

1.1725- 3bln

30

1.1735- 2.5bln

40

Friday 1.1500- 2.3bln

May 29 05

1.1550 1bln

1.1580 715mln

1.1600 896mln

1.1650- 2bln

60

1.1700 866mln

1.1750 1bln Continued option trading can increase the size of current strikes and add new ones, so be sure to check the daily FX option expiry updates that are posted around 7 a.m. London time on FXBUZ.

Related Explainer - Impact of FX option expiries on spot prices (Richard Pace is a Reuters market analyst. The views expressed are his own)

AUD has long traded as a liquid proxy for global risk appetite and that sensitivity cuts both ways. With geopolitical uncertainty high and sentiment fragile, AUD/USD options offer a practical and cost-effective hedge against a broader deterioration in risk appetite - and the volatility numbers support that case.

Benchmark 1-month expiry AUD/USD FX option implied volatility compressed to near parity with realised volatility in mid May, a convergence that historically signals an attractive entry point for option buyers. Those who acted were rewarded as spot sold off sharply last week and implied volatility spiked to 8.8. Realised volatility has since held above 9.0, reflecting the scale of recent spot moves, while 1-month implied has pulled back but found a floor around 8.5 for now. With implied still running below realised, the value case remains intact - and more so on any deeper declines towards mid May lows.

Risk reversals have nudged higher in favour of AUD puts over calls, reflecting a modest increase in demand for downside protection amid the recent spot decline. Even so, the premium remains well below the peaks seen in early March, when market stress was at its height. For those with AUD exposure, that gap is worth noting - downside protection is still available at a relatively modest cost.

Catalyst risk remains real and unresolved. U.S. President Donald Trump has described a deal framework with Iran as "largely negotiated" - but key sticking points are unresolved, and the U.S. blockade remains in full force. Markets have seen this film before, and the gap between framework and signature is where risk lies. Equities have surged and AUD has caught a bid, but the FX options market is not standing down. Implied vols sit unmoved. Markets are pricing hope, not conviction, and that distinction matters. A breakdown in talks would weigh heavily on risk assets, with AUD - given its sensitivity to global sentiment and commodity prices - among the most exposed. A surprise rise in Australian unemployment to its highest since 2021 last week adds a domestic layer of vulnerability.

Options markets are not pricing that risk environment aggressively. For those with AUD exposure, the window to hedge at a reasonable cost remains open.
AUD/USD 25 delta risk reversals


AUDUSD OPTION VOL


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Hopes of US/Iran deal to end the conflict and restart oil flow have aided risk sentiment and ultimately AUD on Monday

• AUD/USD testing top of 19 May 0.7080-0.7177 daily range, which has contained the pair

• 10-dma (0.7173) crossed below 21-dma (0.7186) last week - a bearish sign - but closing above those levels can negate

• 50-dma continues to underpin at 0.7099, but a close below could see bearish sentiment build

• FX option implied volatility met demand on spot setbacks and retains higher levels - a warning and a value hedge
AUD=D3


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY trading tiny intraday ranges around 159.00, with 159.40 the highest post-intervention peak (21 May)

• Pre-intervention rate was above 160.00, knocked to 155.50 (Apr 30) then 155.00 (May 6)

• Markets clearly wary of further intervention, capping upside, June rate hike expectations cap gains, too

• Option implied vol near pre intervention and 4-year lows, with realised vol even lower, reflecting subdued price action

• Yet FX options are primed for an eventual breakout, with a clear downside lean

• 1-month 10 delta Butterfly spread doubled to a 1.2 premium over two weeks, flagging that FX breakout risk

• Risk reversals keep a strong premium for JPY calls over puts - showing intervention risk still considered live
JPY=EBS


USD/JPY 25 delta risk reversals


USD/JPY spot and 1-month 10 delta butterfly spread


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD slips, EUR gains on Iran peace deal hopes — but EUR/USD upside proving limited so far as caution prevails

• EUR/USD recovers 1.1649 from Thursday's early-April low of 1.1576 — but 18-19 May highs at 1.1662/61 cap the move

• Bulls need a close above the 55-dma at 1.1645 to gain conviction — the 200-dma at 1.1682 remains the bigger hurdle

• FX option implied vols stay pinned just above pre-Iran conflict lows — lack of realised vol capping demand of late

• Risk reversals easing — EUR call premiums over puts narrowing as downside pressure on EUR/USD fades with peace hopes

• Cash hedging of large FX option strikes helping anchor EUR/USD of late — more notable expiries due in the 1.16s Monday
EUR=EBS


EUR/USD 25 delta risk reversals


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY remained relatively buoyant though bias down on US-Iran deal hopes

• USD/JPY range 158.75-159.06 EBS, off tad from 159.40 high May 21

• Good tech support eyed at ascending 200-HMA at 158.66

• Intervention risk topside still seen, BOJ June hike expectations too

• Holding at top of 156.37-158.85 daily Ichimoku cloud still

• Hawkish Fed expectations taking hold though, one maybe more hikes this year

• Option expiries nearby today 158.50/70 $784 mln, 158.95-159.05 $642 mln

• Also $1 bln above between 159.20-30, likely cap for now

• EUR/JPY 184.85-185.07 EBS, doing little, in 184.37-185.67 daily Ichi cloud

• CHF/JPY better bid, 202.15-203.24, highest since Apr 24, Apr 21 peak 204.42

• GBP/JPY also bid, 213.22-214.30, tracking away from 211.53-213.31 Ichi cloud

• Towards 214.42 high May 11, recent peak 216.59 April 30

• AUD/JPY 113.55-91, towards 114.73 peak May 13?

• Related comment , also , for more click on [FXBUZ]

USD/JPY hourly:


CHF/JPY hourly:


AUD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• GBP/USD rallies 0.4% in Asia as Iran deal optimism lifts risk appetite

• Oil drops, stocks rally on reports of "largely negotiated" Iran-U.S. MoU

• WTI -4.9%, S&P futures +0.8%, Treasury futures up as Fed rate bets ease

• Caution required; Trump says no rush for deal, Iran says U.S. blocks assets

• Resistance 1.3500, 1.3520-25, support 1.3455-60, 1.3415-20

• Fri range 1.34155-1.34605, Asia 1.3450-1.3494; UK, U.S. markets closed Mon
GBP:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• EUR/USD bid in Asia with crude oil prices off, on possible US-Iran deal

• EUR/USD 1.1621-49 EBS, still below wafer thin 1.1668-74 daily Ichimoku cloud

• Tenkan and kijun heading lower and at 1.1659 and 1.1686, respectively

• Spot currently pivoting around descending 200-HMA at 1.1643

• Option expiries in area today 1.1550-80 E1.2 bln, 1.1600-10 E1.6 bln below

• To upside 1.1635-95 total E4.1 bln, 1.1700-50 E3.9 bln

• These options and market holidays in Europe likely to keep trading quiet

• EUR/JPY 184.85-185.07 EBS, doing little, in 184.37-185.67 daily Ichi cloud

• EUR/GBP heavy, 0.8633-50 and towards 0.8621 low May 1, 0.8612 March 19

• E679 in option expiries today between 0.8675-85 strikes above

• EUR/CHF 0.9103-09 and lowest since 0.9094 on March 23

• Related comments , , , also
EUR/USD:


EUR/JPY:


EUR/CHF:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• USD/JPY still buoyant but optimism over an US-Iran deal biasing it down

• Asia 158.75-159.06 EBS so far following 158.96-159.23 range Friday

• Memorial Day holiday in the US, market holidays in Europe to keep mkt thin

• USD/JPY for now still holding around top of 156.37-158.93 daily Ichi cloud

• Spot below 158.99-159.05 wafter thin hourly Ichi cloud too, 100-HMA 159.01

• Support below from ascending 158.65 200-HMA, bounce from 158.75 early

• 158.59 low May 20, 158.30 May 15, then 157.27 May 14, May 6 low 155.00

• Rate diff on JGB-US Treasury 2s still on wide side, in 10s narrow

• Market looking at one Fed rate hike this year, maybe more, no cuts

• BOJ also expected to hike policy rate 0.25 bps in June

• In options, nearby expiries today 158.50/70 $764 mln, 158.95-159.05 $642 mln

• Just above between 159.20-30 total $1 bln, likely cap for now

• Related comments , , ,

• Also , on US-Iran , , Fed

• US markets , , ,
USD/JPY:


WTI crude oil futures:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• Australian gold stocks rise as much as 4.1%, their biggest intraday pct gain since May 12

• Sub-index set for its third consecutive session of gains, if current trend holds

• Benchmark broadly flat

• Sub-index gains on the back of higher bullion prices

• Gold miners Evolution Mining and Northern Star Resources rise as much as 4.1% and 5.5%, respectively

• YTD, AXGD down 10.8%, while AXJO down 0.6%

(Reporting by Aamir Sheik Khalid in Bengaluru)

• NZD/USD +0.4% Mon as Iran peace prospects broadly lift risk sentiment

• Trump claims peace framework largely negotiated, well received by markets

• Subsequent revelations that U.S. in no rush for a deal largely ignored

• NZD trading near upper hourly Bollinger band, spike likely to be short lived

• RBNZ monetary policy meeting outcome due Wed, no change to OCR anticipated

• Rising Fed rate hike expectations will maintain pressure on NZD/USD

• Range NZ 0.5869-78, support 0.5815 0.5680, resistance 0.5887 0.5991 0.6012
NZD Daily 55-DMA


NZD Hourly Bollinger Study

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD +0.4% early Mon, boosted by hopes of Strait of Hormuz re-opening

• Trump claims Iran MOU largely negotiated but later tempered expectations

• The U.S. President now saying blockade remains in place & no rush for a deal

• AUD pushing upper hourly Bollinger band, early strength likely to dissipate

• Fed FFR hike expectations rising while RBA looks to be on hold for now

• AU Apr monthly CPI update due Wed, Q1 capital expenditure data Thur

• Range Asia 0.7145-68, support 0.7080 0.6834, resistance 0.7283 0.7661
AUD Hourly Bollinger Study

(James Connell is a Reuters market analyst. The views expressed are his own.)

• NY opened near 1.1600 after 1.1620 traded overnight, pair neared 1.1620 early

• Sellers then emerged, 1.1589 traded on the back of firmer USD, US yields

• USD buying abated & yields softened while stocks, silver & gold moved upward

• Oil pulled back from earlier highs to near flat which helped improve risk sentiment

• EUR/USD neared 1.1620 in NY's afternoon, was close to flat on the session

• Techs lean bearish; Monthly RSI falling & pair is below 10-, 21-, 55- & 200-DMAs
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.7120 after AUD/USD traded downward in Asia & Europe

• The pair swung wildly in early NY, hit 0.7143 then fell to 0.7117 quickly

• Buyers emerged as USD buying abated & yields softened

• Equity gains, silver's bounce off its low & oil's slump helped buoy AUD/USD

• AUD/USD neared 0.7140 and traded down only -0.18% in NY's afternoon

• Techs lean bearish; RSIs indicate downward momentum, pair below 10- & 21-DMAs
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• GBP/USD quietly consolidating as spot remains pinned to the 200DMA cluster (1.3410-24)

• UK retail sales completes hat-trick of soft data prints (Jobs, CPI also weaker)

• Waller leans hawkish, though signals no action in the near-term

• Bias stays lower with spot holding below 1.3485-1.3500

• That said, failure to sustain dips through 1.34 suggest we are in for a spell of more sideways action
GBP trade


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

JP Morgan Research discuses its AUD and NZD outlook and targets.

"AUD: Keep bullish bias as carry remains supportive, though the RBA’s front-footed hiking cycle has weakened growth & housing such that market pricing for two further hikes looks overdone. Background supports (super fund FX hedging & unhedged capital inflows) should underpin a higher AUD floor than in recent years. AUD/USD 2Q 0.73, 4Q 0.69," JPM notes.

"NZD: Stay neutral amid cross-currents as ongoing cyclical recovery sets the stage for a fulsome RBNZ hiking cycle beginning in 3Q, but current carry deficit is weighing on performance while energy-importer status remains a clear downside growth risk. NZD/USD 2Q 0.62, 4Q 0.61," JPM adds.

By Justin McQueen

May 22 (Reuters) - Cable drifting sideways to close out the week, remaining pinned between the 200-day moving average cluster at 1.3410-24. Tone stays heavy for now. UK retail sales wrapped up a hat-trick of soft prints – UK jobs, CPI, now this – and spot is struggling as a result, thus risks remain lower for now. Remarks by Federal Reserve Governor, Christopher Waller were the key event risk today. On balance he was hawkish, by opening the door towards a rate hike, albeit in the far distance. He did push back against near-term tightening, which does restrain the hawkish rhetoric. That said, the direction of travel has shifted materially from where we were a few months back. If the data keeps pointing towards tightening and the Strait of Hormuz stays shut, the argument against a Fed hike gets harder to make, meaning the USD bid becomes more durable, paving the way for a deeper retracement in cable.

Offsetting that however, is the pickup in geopolitical noise. Chatter around a U.S.-Iran deal is getting louder, and the lean in the market is that we get something done rather than not. Nothing confirmed, it is still headline-driven but the rumour mill is seemingly heading in one direction. Should a deal get done, cable is likely to receive a lift, but with domestic risks stacking up, both economically and politically, upside looks capped.
Fed waller post


Justin McQueen is a Reuters market analyst. (The views expressed are his own) ((Email: ))

ANZ Research discusses AUD outlook for the coming week.

"We view the recent pullback in the AUD/USD as more of a healthy correction rather than a sustained downward trend. The pair is overvalued against where front end rates are, which implies that last week’s rally to a weekly high of 0.7272 (13 May) was primarily driven from risk sentiment. Ultimately, we think risk sentiment will be at the forefront of a near-term AUD/USD recovery," ANZ notes.

"In the week ahead, the AUD/USD should hold the 0.71–0.72 level, absent major geopolitical shocks developments. That said, we see scope for upside on positive geopolitical headlines given risk sentiment has somewhat normalised of late.

Looking ahead, April CPI due on Wednesday will be the main domestic event where we expect trimmed mean to have risen 0.3% m/m and 3.4% y/y. We see scope for a mild intraday pullback in the AUD/USD on an in-line or below consensus print. We would likely need a clear miss from expectations to see any sustained moves in the AUD/USD," ANZ adds.

(Updates)

• U.S.-listed shares of silver miners fall, tracking prices of the white metal [GOL/]

• Spot silver down 1% at $75.8 per ounce

• Prices fall due to firmer dollar and rising oil prices that kept inflation concerns in focus and increased bets for U.S. interest rate hike

• Shares of miners Hecla Mining down ~2% and Coeur Mining falls 2.5%

• Canadian miners: Endeavour Silver Corp and Silvercorp Metals dip 2.5% and 4.1%, respectively

• Abrdn Physical Silver Shares ETF and iShares Silver Trust each slides 1.2%

(Reporting by Dharna Bafna in Bengaluru)

Bank of America Global Research flags a bearish technical pattern in EUR/USD.

"Based on our view that the weekly chart of EURUSD is forming a H&S top pattern, we recommended positioning for euro weakness into summer via a EURUSD 1.15/1.13 3m put spread,"BofA notes.

"A May 22 weekly close below 1.1625 would support this setup and downside toward the 1.1411 / 1.1392 neckline. A break below the neckline can lead to 1.11 / 1.0958 (200wk SMA). A recovery rally above Q2 highs at 1.1797-1.1849 would cancel this pattern," BofA adds.

Credit Agricole CIB Research discusses the USD 'smile' and the USD outlook for the coming week.

'We continue to believe that the USD smile – the analytical construct that links the USD outlook to the resilience of risk sentiment and the level of US rates – should remain a dominant template for the FX markets. The ‘USD smile’ would suggest that the USD need not lose ground even if we see risk sentiment rebounding on the back of growing market hopes for a US-Iran peace deal. This is because the USD should benefit from returning demand for FX carry trades and unhedged inflows into the US stock markets, fuelled by growing market risk appetite," CACIB notes.

"Looking ahead into next week, focus will be on the Core PCE deflator for April, which is still the Fed’s preferred measure of inflation. In addition, FX investors will focus on Conference Board consumer confidence index for May and the durable goods orders for April. We will also hear from the Fed’s John Williams. While the USD could suffer from any sustained improvement of market risk sentiment, we doubt that the currency would embark on a downtrend. Indeed, easing market fears and fading geopolitical risks could help investors focus on the incoming US data releases and their (positive) impact on US rates and thus the USD," CACIB adds.

(Repeat with no changes)

• FX options expire at 10am New York/15:00 GMT on Friday May 22

• EUR/USD: 1.1545-50 (947M), 1.1575-80 (1.3BLN), 1.1590-1.1600 (1.5BLN), 1.1610-20 (2.3BLN)

• 1.1625-35 (3BLN), 1.1640-50 (1.4BLN), 1.1660 (518M), 1.1700 (1.8BLN)

• EUR/GBP: 0.8575 (400M), 0.8700 (335M), 0.8720 (446M).

GBP/USD: 1.3300 (341M)

• AUD/USD: 0.7150-60 (1.7BLN). NZD/USD: 0.5750 (758M)

• AUD/NZD: 1.2100 (257M), 1.2185-1.2200 (416M)

• USD/CAD: 1.3750-55 (1BLN), 1.3765-75 (531M), 1.3800 (477M), 1.3850 (370M)

• USD/JPY: 1.5845-50 (2.9BLN), 158.65-70 (1.5BLN),158.85-90 (1.2BLN), 159.00 (1.4BLN), 160.00 (828M)

• AUD/JPY: 1.1340 (374M), 113.65-75 (247M)

• FX options wrap - EUR caution, JPY warning, AUD hedge, INR trade (Richard Pace is a Reuters market analyst. The views expressed are his own)

(Adds headline)

• AUD/USD hit 0.7152 overnight, sellers emerged, the pair turned lower on the session

• Doubts about progress being made on US-Iran deal rallied oil and the USD

• Gold and silver dropped on the doubts to help weigh on AUD/USD

• AUD/USD hit 0.7121 in early NY, the pair traded down -0.38% in early action

• Techs lean bearish; RSIs indicate downward momentum, pair is below 10- & 21-DMAs

• Monthly inverted hammer candle, consolidation of drop from May 13 high are bear signs

• US May U of Michigan sentiment is a data risk in NY's morning
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• U.S. exceptionalism holds firm as data continues to outperform relative to the RoW

• Thursday's Flash PMIs reinforced this view as EU data came in soft while U.S. held steady

• For EUR/USD, this keeps risks leaning lower underscored by the fact that rebounds remain shallow

• Meanwhile, sticky oil prices adds a headwind that is hard for EUR to shake

• Technically, spot is trading below the 200DMA (1.1683), which keeps bear bias intact

• Reclaiming the 200DMA would be needed to alleviate the bearish pressure

• Looking ahead, all eyes on Fed Governor Waller's speech (1500BST)

• Any hawkish tilt opens the door for EUR to test 1.15
EURUSD vs eco spread


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))