yields are off recent highs, which has thwarted the USD recovery, but dollar bears need to tread carefully while a clearer picture emerges nL1N2JO0MS.
For now, at least, implied volatility, which gauges future volatility expectations and determines option premium, has eased from Monday's peaks - more consistent with range trading.
EUR/USD was looking less vulnerable to steeper declines after recovering from Monday's 1.2132 base, but failure to regain the 21-day moving average, 1.2227, and setbacks to mid 1.21s, prompted a pick-up in downside demand.
One-week and one-month risk reversals regain a EUR put/USD call premium nL1N2JO1FK.
Hedging of 7 billion euros of expiries 1.2190-1.2250 next Tuesday should make that zone sticky ahead nL1N2JO0F9.
GBP/USD couldn't breach two-year highs above 1.3700.
Conviction was lacking in both spot and option markets since risk premiums pared post-Brexit deal nL1N2JO0XM.
USD/JPY one-month vol 6.0 from 6.4 Monday, while minor spot setback has lifted one-month risk reversals back to 0.55 from two-year lows at 0.4 JPY calls/USD puts.
One-month AUD/USD up 1.0 to 10.85 since last week, last 10.35.
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