Implied volatility is the FX option markets gauge of perceived actual volatility over a given period, and although one-week expiry is higher since capturing the U.S. Federal Reserve policy announcement, it's trading below one-week daily historic volatility, its fair-value measure.
One-week daily historic volatility is actual volatility over the previous week on a daily spot closing basis.
Holders of implied volatility want actual volatility to outperform it to profit, so the fact that one-week implied at 7.5 is below one-week historic at 8.1 suggests dealers feel actual volatility over the next week will be less than last week's.
EUR/USD dealers tout decent bids ahead of 1.1900, where some good-size option expiries will shore up the level this week nL1N2LD0EK.
Offers near 1.2000 should help define the near-term range.
Recent option pricing and flows do, however, show a premium for downside protection, but it's off recent highs, and combined with a lack of demand for implied volatility is more akin to range trading nL1N2LA0PX.
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