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Oct 29 - 05:55 AM

EUR/USD - Dovish ECB Expected, Options Offer Clues On EUR/USD Reaction

By Richard Pace  —  Oct 29 - 03:35 AM
  • ECB to pave way for more stimulus as recession fears grow nL8N2HJ5JZ

  • Thus, next move not seen until December, but dovish tilt expected/priced

  • That should limit reaction Thursday - option market agrees

  • Overnight expiry implied volatility 10.5 - straddle break-even 50 pips

  • Above average, but entire vol curve up amid pre U.S election price shift

  • USD call hedging flips risk premium to EUR/USD downside nL1N2HJ0LX

  • Big impending option expiries nearby - can help contain today nL1N2HK0EW

  • Related nL1N2HJ1M8



Overnight (next day) expiry implied volatility Click here

Source:
Refinitiv IFR Research/Market Commentary

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