Options may hold EUR/USD in a tighter embrace
Oct 30 (Reuters) -The influence of options grows when it's quiet and EUR/USD is certainly quiet with this year's range falling within last year's which was the second smallest on record.
The influence of hedging related to options of which there are many around current levels is likely to grow with the magnetism of large expiries increasing and the presence of so many options effectively anchoring this listless currency pair.
There is literally an abundance of expiries on a daily basis with 9 billion euros in a 1.5 cent range between 1.0775 and 1.0925 rolling off on Oct. 30, while almost 6 billion euros of options expired on Tuesday in a slightly smaller 1.0780-1.0885 range.
The closer these options are to spot when the expire, the greater the interest to hedge them and the more magnetic they are.
On most days there are billions of euros worth of options nearby at 15GMT - NY cut - when they expire which will make it hard for EUR/USD to move away from the centre of last year's range at 1.0862, to which it has repeatedly returned in the past two years.
It will take a big shock or a major change in fundamentals to force a break and with this year coming to an end, the chance of a break is diminishing daily.
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EURUSD https://tmsnrt.rs/3Uv8h1b
(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
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