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Dec 13 - 07:24 AM
EUR/USD - REFILE-BUZZ-COMMENT-Don't Expect A Sustained EUR/USD Rally
First appeared on eFXplus on Dec 13 - 05:00 AM

Corrects 200-dma to broken, rather than closed above

EUR/USD Broke it's 200-DMA 1.1153 Thursday for the first time since June, but yet to close above. More significant resistance is at 1.1275 -- 23.6% Fibonacci retracement of the 1.2556-1.0879 - 2018-19 slide, although a close above that 200-dma and a 55-WMA at 1.1212 today could make that Fibo a target.
However, option pricing shows no real expectation of a sustained rally, certainly in the short term.
There's been no real pick-up in demand for options that would benefit from EUR/USD pushing too far above 1.1200 before the end of the year.
Implied vols are still trading close to record lows, which signals a lack of expected volatility.
Risk reversals retain an implied vol premium for EUR calls versus puts (the right to buy EUR/USD versus sell it), but that's been in place for some time and hasn't increased.
Finally, the options market is still very long of existing option strikes in the 1.10-1.1200 range before year's end, which is helping hold down overall volatility and its ability to rally -- even a test above will attract more hedge flows and profit taking nL1N28D060

EUR=EBS: Click here

EURUSD risk reversals: Click here

EUR/USD 1-month implied volatility: Click here

Refinitiv IFR Research/Market Commentary


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