FX Options: Investors believe in the rebound in EUR/USD and USD/JPY

Omkar Godbole FXStreet Contributor

The EUR/USD rose to a high of 1.1850 on Friday after the US inflation number missed estimates. The daily chart below shows a nice rebound from the trend line support. This is encouraging sign for the bulls and the options data published by the CME shows the investors expect the rebound to continue today.

EUR/USD EUUU7 Open Interest Change: Current (Aug 11 - Prelim) vs. Aug 10

The max OI accumulation is seen in 1.20 Call option, suggesting the level is likely to act as a strong resistance.
The OI accumulation in the Put options is spread mainly over 1.1750 strike, 1.17 strike, 1.1650 strike and 1.16 strike. Higher accumulation is seen in 1.10 Put.

On Friday, max additions were seen in 1.1850 Call, which suggests investors are expecting the rally from the trendline support to continue this week. Call buying was also seen in 1.18 and 1.19 Call, while Call writing was seen at 1.21 strike.
1.16 Put option added 377 contracts, taking the tally OI to second highest, thus suggesting that a breach of the level to the downside could yield sharp losses.

View:

Options activity suggests the investors expect a re-test of the recent highs around 1.1910 and possibly breach the same for 1.20 handle.
However, the ratio [0.09] of change in the Put OI [+235] to the change in the Call OI [+2390] signal extreme bullish sentiment, if we take into account the overbought nature of the pair following a 1500 pip rally.

USD/JPY - Investors expect bullish reversal confirmation

Friday’s Doji candle [bearish exhaustion] has been followed by a rally to 109.80 levels today. A positive end of the day close today would confirm bullish reversal, i.e. the sell-off from the high of 114.49 [July 11 high] has ended.

The options data for JPY/USD published by the CME shows the investors do not see the Yen holding strength or have bought downside protection against Yen longs, given the recent rally has been fueled by the geopolitical tensions, which tend to die down quickly.

On Friday, investors boosted the open interest [OI] in the Put options by 314 contracts. The OI in In-The-Money {IMT} put options improved by 276 contracts.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD sticks to positive bias above 1.1800 as trade jitters undermine USD

The EUR/USD pair builds on the previous day's modest gains and attracts some buyers for the second straight day on Thursday amid a softer US Dollar. Spot prices, however, lack bullish conviction and trade around the 1.1815-1.1820 area during the Asian session, up 0.10% for the day.

GBP/USD extends recovery to near 20-day EMA as US Dollar weakens

The Pound Sterling holds onto weekly gains around 1.3565 against the US Dollar during the Asian trading session on Thursday. The GBP/USD pair trades firmly as the US Dollar remains under pressure due to uncertainty surrounding the United States trade policy outlook.

Gold struggle with $5,200 extends ahead of more US-Iran talks

Gold is replicating the recovery moves seen in Wednesday’s Asian trading early Thursday, as buyers continue to flirt with the $5,200 level. Sustained US Dollar weakness and looming US-Iran talks aid the bright metal’s rebound.

Top Crypto Gainers: Polkadot, Near Protocol, Uniswap lead market rebound

Altcoins, such as Polkadot, Near Protocol, and Uniswap, are leading gains over the last 24 hours as Bitcoin jumped 6% on Wednesday. The altcoins are holding steady at press time on Thursday following a rebound the previous day, testing the waters around their 50-day Exponential Moving Average.

Nvidia delivers another monster earnings report, and forecasts big things to come

It was another monster earnings report from Nvidia for fiscal Q4. Revenues were $68.1bn, smashing estimates of $65bn. Gross profit margin was a healthy 75%, up from 73.5% in the prior quarter, and the outlook for this quarter was monstrous.

Cosmos Hub Price Forecast: ATOM rebounds slightly, bearish outlook remains intact

Cosmos Hub (ATOM) price rebounds, trading above $2.05 at the time of writing on Wednesday, after undergoing a sharp correction since last week. Weakening on-chain and derivatives data support a bearish outlook, while technical analysis remains unfavorable.