• Positive headlines to end Mid-East conflict are risk friendly and a weight on USD - supporting EUR/USD

• However, while negotiations continue and the Straight of Hormuz remains closed, economic concerns grow

• EUR/USD only matched Wed's 1.1661 peak after Thursdays ceasefire agreement - bulls yet to force a breakout

• A close above 55-dma 1.1654 and more important 200-dma 1.1682 would embolden buyers

• Daily cloud 1.1647-1.1702 adds to resistance, while support rests at recent daily lows 1.1586-77

• FX options endorse the situation - implied volatility at lows since Jan and lacks meaningful directional risk premium

• The hedging of more huge FX option expiries is also helping to shackle EUR/USD of late
EUR=EBS


EUR/USD FXO implied volatility


(Richard Pace is a Reuters market analyst. The views expressed are his own)