• EUR/USD trades 1.1280-1.1327 Friday, inside Thursday's 1.1344-1.1255 range

• Pre UK/US long weekend holiday to aid consolidation, huge expiry hedging too

• A massive 7-billion euros of strikes expire within the recent range Friday

• Related hedging flows around strikes can add congestion within range

• Implied volatility retraces mid week surge, but well above last weeks lows

• Topside over downside strike premiums on risk reversals mildly lower, too

• However, they stay near 5-year highs and flag strong upside risks to EUR/USD

• FX options wrap - Pricing a lull before next USD drop
EUR/USD option risk reversals


EUR/USD FXO implied volatility

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