Insights 
VT 
There are a couple of FX option expiries to note for today. The key levels for EUR/USD are 1.1400 and 1.1475-90, as the pair faces pressure from the US-EU trade deal developments and a stronger dollar.
The expiry at 1.1400 may stabilise the price action as traders navigate recent momentum. This occurs amidst month-end flows and key US data, leading up to tomorrow’s focus on non-farm payrolls.
AUD USD Expiry
In addition, there is an expiry for AUD/USD at the 0.6465 level. This isn’t associated with any technical level causing impact, as the pair finds support from its 100-day moving average at 0.6426.
For additional guidance and context on these figures, further information is available online.
Looking back, we can recall a time around 2018 when EUR/USD was dealing with levels like 1.1400, heavily influenced by US-EU trade disputes. Today, the situation is different, with the pair trading around 1.0950 as the market focuses on the divergence between central bank policies. This historical shift reminds us how dominant themes can change over the years.
The European Central Bank is signaling a more patient stance on rates, especially after recent Eurozone inflation came in at 1.8%, just under their target. Meanwhile, the US Federal Reserve remains cautious, as the latest Core PCE data is proving sticky at 2.7%, well above their own goal. This policy gap continues to provide underlying support for the dollar, keeping the euro below the key 1.1000 level.
For derivative traders, this means large option expiries noted around the 1.0900 strike will likely act as a short-term floor for price action. We must remember that today is the end of the month, so portfolio rebalancing flows could create some choppy price action. These flows, combined with the US Personal Consumption Expenditures data due later, will be the main focus before tomorrow’s non-farm payrolls report.
Echoes of the Past in AUD USD
We also see echoes of the past in AUD/USD, which was once defending the mid-0.6400s. Now, with the pair trading closer to 0.6800, the conversation has shifted from simple technical levels to China’s economic health. The Australian dollar’s fate is currently tied to demand for industrial commodities.
Recent industrial production figures out of China showed a modest rebound, giving the Aussie some support. However, this is tempered by the fact that iron ore prices have softened, dropping from over $110 to near $102 per tonne in July. This leaves the currency vulnerable to shifts in global risk sentiment and makes the upcoming global manufacturing PMI data particularly important for direction.
