Investment Risks in Open Markets

Markets and instruments mentioned are for informational purposes and no recommendations are made. It is essential to conduct thorough research before making investment decisions. Note the risks, including potential total losses, associated with investing in open markets.

With the expiry data laid out for 22 May, there’s potential for volatility around several key price zones, particularly in major pairs where sizeable option blocks are set to roll off. These clusters behave as magnets under certain conditions, nudging spot prices closer as positions are hedged or unwound.

In EUR/USD, the 2.1 billion euro interest tied to the 1.1175 level is markedly larger than typical daily expiries. That type of volume tends to act as a gravity centre if spot trades nearby, particularly when dealers hedge significant vega exposure. Given the proximity of spot to this level, any push towards 1.12 could experience added friction or propulsion depending on flows. The higher 1.1400 with 751 million still matters, but its influence diminishes without strong directional moves leading into the expiry.

Recognising Positioning Pressure

Sterling traders should be alert to the 778 million GBP expired at 1.3260. That strikes slightly above current price levels, implying a mild upside pull could unfold in short bursts, especially if intraday conditions lean bullish and underlying flows align. Similar thinking applies to yen positions. Though 601 million USD at 143.50 isn’t off the scale, it’s enough to offer resistance or a short-term tether if price action drifts upward.

USD/CHF presents a different picture. The concentration around 0.8525 with 598 million might offer minor technical friction, but it lacks the volume that would make it a high-probability attractor. Still, it’s not ignorable, particularly if we find ourselves trading within a tight band on thin liquidity days.

For AUD/USD, while the volumes – 204 and 286 million AUD – are lower versus others, the spread between 0.6100 and 0.6700 is meaningful. The lower end may act as a descending anchor, especially in risk-off sentiment, while the higher 0.6700 expiry likely requires broader fundamental drivers to come into play. That upper strike remains out of striking range absent a sharp macro impulse.

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