Despite recent EUR/USD gains, the options market has struggled to build a case for gains above the medium-term range highs, in the low/mid 1.12s.
Shorter-dated implied volatility has seen some demand, as it profits more from intraday spot volatility, but options past one month have been much slower to react.
The benchmark one-month implied volatility paid 6.8 Wednesday, but is up just 0.3 vols since EUR left the 1.0900 handle.
Risk reversals show implied volatility is back in favour of EUR calls over puts (topside) out to two months, but the premium is tame, and dealers have been loathe to add more, despite EUR/USD gains.
EUR/USD is back at levels seen pre-crisis and still below the August range top at 1.1250, where range binary option barriers reside -- which could be the level that sparks more bullish attention if breached.
For now, focus is on the European Central Bank Thursday.
Options are on alert for heightened volatility nL1N2DG0AZ, but dealers shouldn't ignore the effect of 6 billion-plus expiries on spot nL1N2DG0BK