Large Expiry for AUD/USD
Additionally, a large expiry for AUD/USD at the 0.6500 level is set for tomorrow. This could stabilise price movements before the expirations take effect.
We see that the large USD/JPY option expiry at 147.65 will be a key focus for today’s session. Combined with resistance from the 100-hour moving average near 147.77, any upward moves should face significant pressure. This technical barrier is likely to keep the price contained for now.
The confusion over potential 15% tariffs on Japan is creating the real uncertainty for the weeks ahead. This political headline risk means traders should be prepared for sudden price swings based on new comments from officials. This situation makes holding long-term directional bets very risky until there is more clarity.
Fundamentally, the picture is complicated because recent U.S. economic data supports a stronger dollar. For instance, the July 2025 jobs report showed non-farm payrolls beating expectations by adding 215,000 jobs, while wage growth remained firm at 4.2% year-over-year. This strength contrasts sharply with the political tariff risk, creating a tug-of-war in USD/JPY.
The Bank of Japan, in its late July meeting, offered no surprises and maintained its ultra-easy monetary policy. This policy divergence with the Federal Reserve, which is holding rates steady, would normally suggest a much higher USD/JPY. However, the current political climate is overriding these traditional economic drivers for now.
Massive AUD/USD Option Expiry
Looking back, we saw similar dynamics during the 2018-2019 trade disputes, where negative headlines often caused sharp, temporary drops in USD/JPY as investors sought the yen for safety. Traders should be cautious, as a similar flight-to-safety move could easily push the pair down, despite the strong U.S. data. This makes selling options to collect premium on expected volatility an interesting, albeit risky, strategy.
Separately, we need to watch the massive AUD/USD option expiry set for tomorrow at the 0.6500 level. Such a large concentration of options tends to act like a magnet, pinning the currency pair around that price. This may limit any significant moves leading into the expiry.
This stickiness in AUD/USD is further supported by recent fundamentals, including softer-than-expected Chinese industrial production figures released last week. Given Australia’s economic link to China, this data has capped any real enthusiasm for the Aussie dollar. We feel the 0.6500 level will likely hold as a ceiling until those options roll off.
