Today sees minimal activity on the FX option expiries board due to market closures for Good Friday and Easter Monday. A minor expiry for EUR/USD at 1.1390 might influence price actions amidst thinner liquidity. This period may prompt exaggerated price movements given reduced market presence.

Trade Dynamics Focus

Overall trading sentiment remains driven by the wider market atmosphere and potential headline developments. Current focus remains on trade dynamics, particularly the situation involving US tariffs and relations with China. This aspect continues to be a major consideration for the market.

Given current conditions, with reduced market participation and lighter liquidity, pricing mechanisms can shift more abruptly than usual. We should expect that even modest flows or relatively small expiries, such as the EUR/USD positioning around 1.1390, may exert a stronger-than-usual pull on spot prices if triggered in low-volume sessions. It’s not that the expiry size is compelling in isolation, but it’s capable of drawing more attention when macro inputs are otherwise dormant.

The subdued environment around the holidays makes the markets more susceptible to one-off news events or reactive trades. From what we’ve seen, marginal positioning choices or mispriced gamma can catch traders off guard in transitions like this. As always, care needs to be taken when reacting to morning gaps, since most moves may lack the foundational follow-through typical of fully staffed trading days.

The earlier focus on broader trade disputes, especially with reference to tariff levies and their broader economic transmission, has not subsided. Lighthizer’s recent remarks underscored a hardening tone in negotiations, which caught some participants slightly behind the curve. This gives weight to the view that futures pricing may become somewhat unanchored in the short term if such positional headlines recur unpredictably.

Market Liquidity Outlook

We don’t expect a full resumption of normal liquidity until later next week, and even then, defensive structures in the short-dated tenors are likely to remain in demand. The way front-end vol has been pricing implies a regime of hesitancy — not panic, but checked enthusiasm. While larger macro data points remain absent until mid-month, technical inflection zones tethered to gamma-heavy strikes could provide support or resistance levels with more vigour than usual.

For those managing risk, it helps to account for the reach of lightly populated expiry clusters in the coming sessions. The gaps between them may exaggerate intraday moves as liquidity providers widen spreads to mitigate uncertainty. If the previous lows and highs align near areas with decent open interest, expect those zones to become reaction points. This is especially relevant when considering the overnight drift tendencies during illiquid Asian sessions filtering into London trade.

When we pulled the implieds for next week’s sessions, the forward vol curves displayed a mild uptick at the lower end — nothing aggressive, but enough to paint a picture of latent nervousness. The response has mostly been confined to shorter risk reversals, but skew adjustments in both EUR and GBP pairs suggest a return of mild haven positioning.

One thing that’s worth analysing in more depth is the disconnect we’re detecting between realised and implied metrics on lower-volume days. We’ve already observed pockets where realised has languished below implied on too many sessions to dismiss as noise. If this persists into April, implied ranges could be walking ahead of actual performance, leading to overpriced vols — something that should be managed with tighter strike selection.

With the median expiry now pushing closer to dates just after key macro bulletins, we believe that straddle efficiency will continue to weaken until data catch up with the volatility premiums on offer. It may help to shorten tenor selection and avoid anchoring bias around recent support zones. Use these low-volume breakouts to recalibrate edge assumptions, rather than chase directional conviction in thinner books. The more we avoid being led by incomplete signals, the better the asymmetry tilts in our favour.

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