• FX option implied volatility sits on long term lows amid the lack of FX realised volatility

• Volatility is the lifeblood of options, so without it - volatility risk premiums drop and activity slows

• EUR/USD fits that mould, with large and soon-to-expire options/hedging flows helping to contain

• However, its worth noting the support for EUR put over call implied volatility premium on risk reversals

• Shows greater concern about EUR/USD losses than gains

• Any drop toward recent/1-year lows at 1.1325 is clearly expected to lift implied vol and option premium

• Related - FX options wrap - Summer lull trumps war risk
EUR/USD FXO implied volatility


EUR/USD 25 delta risk reversals


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