Impending FX option expiries can influence price action in the underlying spot market, so 40 billion euros of EUR/USD option expiries shouldn't be ignored.
Last week saw 20 billion euros in the 1.1200-1.1300 range play their part in containing price action nL1N2E605V, and DTCC option reported data shows 40 billion euros evenly spread between 1.1200 and 1.1400 over the next fortnight.
However, by comparison, only around 6 billion euros below 1.1200 in that time frame, meaning EUR/USD will be more vulnerable to volatility/losses below 1.1200 if it comes under renewed pressure, with less related hedge demand to underpin.
Those with exposure to FX options will typically offset it in the FX cash market, by buying below and selling above the strikes.
This (delta) hedging effect is what can influence price action and keep the cash rate close to the option strikes, more so as expiries approach.
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