EUR was sagging in the Asia session, could a dovish ECB later this week to blame? The single currency was a tad heavy going into a week jam-packed with central bank meetings. Russia-Ukraine tensions and the Omicron spread were also raising concerns.
EUR/USD was trading early at 1.1319 to 1.1293 EBS, back below 1.1301-10 hourly on the Ichi cloud. Through 1.1297 100-HMA, a flat Ichi kijun just below at 1.1295 too. The pair have been trading light, an inside day; range Friday was 1.1266-1.1319. There are large options expiring on sides—1.1250 E1.4 bln, 1.1320 E2 bln
EUR/JPY saw 128.44 in early Asia trading, reaching 128.26. EUR/GBP reached 0.8525-34, also a tad heavy. EUR/CHF indicated 1.0415-23.
DTCC traded FX option data shows massive nearby strikes expiring Monday; related delta hedging helps containment, adds to support and resistance. 1.5-billion euros 1.1250, 1.1-billion 1.1270-1.1300, 2-billion 1.1320.
Option implied volatility supported ahead of key central bank meetings shows the market is wary of post central bank volatility, despite being quiet ahead of time.
The 1-month risk reversals have erased their long term downside premium.
