Analys från DailyFX
EURUSD Options-Derived Daily Range Ahead of FOMC Minutes
What’s inside:
- EURUSD one-day implied volatility pricing in one-standard deviation high/low of 11765/11643
- FOMC minutes to be released at 18:00 GMT could generate volatility, but not expected to be big; room for surprise
- Confluence of options-derived and price levels outlined
Looking for a longer-term view on EURUSD? Check out our Q3 Forecast.
In the following table are implied volatility (IV) levels for major USD-pairs for the next one-day and one-week time periods. Using levels of IV we calculated the projected range-low/high prices from the current spot price within one-standard deviation for specified periods. (Statistically, there is a 68% probability that price will remain within the lower and upper-bounds.)
EURUSD one-day implied volatility ‘normal’, pointing to a one-standard deviation high/low of 11765/11643
EURUSD one-day implied volatility is currently at 10.01%, while one-week is at 7.40%. This implies a one-standard deviation range from current spot price of 11765/11643 and 11824/11584, respectively. Later today, at 18:00 GMT we have the release of the July FOMC minutes, and looking at short-term implied volatility there isn’t an expectation for a huge move to ensue upon the release. But as we have seen before, the market can have it wrong and larger than expected price swings can unfold as a result.
The one-day projected high of 11765 lies just above today’s current intra-day high of 11758 and the projected low arriving at 11643 is near the lower parallel of a developing channel (possible bull-flag). Given the generally negative short-term trend in the euro the bias is still for it to work off overbought conditions generated by the move from the middle of June to earlier this month. With that in mind, any pop higher may find itself with limited momentum. A move lower on the other hand could find support at the near confluence of the 2016 high of 11616, projected range-low of 11643.
Looking out over the next week, the projected low is of interest given it aligns relatively well with the April trend-line (and possibly the 2016 high), and should we see a drop there in the next few days buyers may step up and keep the euro supported at that juncture. A break higher would be come on a breach of the top-side trend-line and we could find one-week IV underpriced as the euro attempts to break above the monthly high at 11910.
For other currency volatility-related articles please visit the Binaries page.
EURUSD: Daily
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—Written by Paul Robinson, Market Analyst
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You can follow Paul on Twitter at @PaulRobinonFX.
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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