Dealers report very good size demand for 1-3-month EUR/USD options by a large hedge fund late Wednesday, which has driven short covering from what could be seen as valuable levels.

Buyers of broader vol (implied volatility) might typically be targeting what they see as value levels at which they can benefit from further demand/gains and/or a pickup in actual volatility.

The follow-through demand early Thursday has already seen the benchmark expiry 1-month EUR/USD implied volatility paid at 8.25 from 8.0 early Wednesday.
It hit solid support at pre X-mas and lows since Feb 2022 at 7.5 last week before bouncing to 8.6 in the wake of Friday's big U.S. jobs data beat.

One-month expiry captures the March 3 U.S. jobs data on top of next week's U.S. CPI, which have gained in importance and volatility risk premium after Friday's jobs beat.
Actual volatility over the previous month as measured by daily historic volatility (once daily cash hedging) is only marginally below the current implied volatility, while hourly historic (more frequent cash hedging requirement) is well above implied volatility to reinforce its current value potential.
It's a similar situation in 2-3-month expiry implied volatility, which has been paid at 8.25 and 8.3 respectively on Thursday.

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