What’s inside:

  • One-day implied volatilities don’t stand out as high ahead of the FOMC minutes
  • This suggests volatility could be subdued following the release, but always be prepared
  • EURUSD, GBPUSD, USDJPY charts with range levels examined

Find out in our Q4 Forecast what is expected to drive the US dollar through year-end.

In the following table, you’ll find implied volatility (IV) levels for major USD-pairs looking out over the next one-day and one-week time-frames. Using these levels, we’ve derived the range-low/high prices from the current spot price within one-standard deviation for specified periods. Statistically speaking, there is a 68% probability that price will remain within the lower and upper-bounds.

EURUSD, GBPUSD & USDJPY Options-implied Levels Ahead of FOMC Minutes

One-day implied volatility is relatively ‘normal’ across the dollar-spectrum. So far, it’s been a rather ‘ho-hum’ type of day with limited price movement, and while there is likely to be a spat of volatility following the release of the minutes, it could remain a fairly uneventful day once the dust settles through the NY close. At 18:00 GMT time, the minutes from the September FOMC meeting will be released, and again, while there aren’t big expectations for major price swings it’s always prudent to be prepared in the event of a surprise.

EURUSD

The one-standard deviation range from the current spot price is 11770-11880. Of interest here is the alignment of resistance and the 11880-projected high. The expectation on this end is that the bounce in recent sessions is just that, a bounce, and that the euro will roll over soon. With that in mind, sustaining overhead levels could prove difficult.

EURUSD: Daily

EURUSD, GBPUSD & USDJPY Options-implied Levels Ahead of FOMC Minutes

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GBPUSD

Cable has the second highest level of one-day implied volatility at 10.74%, but that is unsurprising given it also has the second highest one-week IV at 8.63%, only behind NZDUSD (which has been elevated for a while). Unlike EURUSD, there isn’t any significant confluence between the projected range levels and price levels. Cable is turning down off of resistance, which if held would mean that the 1-day projected high won’t be exceeded. But looking lower, there is nothing highly notable.

GBPUSD: Daily

EURUSD, GBPUSD & USDJPY Options-implied Levels Ahead of FOMC Minutes

USDJPY

The projected one-day range is 11172 to 11280. Of interest here is the range-high as it aligns with several recent closing values in the 11280/84 area. There have been a number of ‘tail-days’ where rallies failed, which points to a lower near-term bias. The one-day low is in alignment with the 11172 close on 9/25, but it’s just one day and doesn’t hold the same significant as the multiple closes seen around the top-side level.

USDJPY: Daily

EURUSD, GBPUSD & USDJPY Options-implied Levels Ahead of FOMC Minutes

For other currency volatility-related articles please visit the Binaries page.

---Written by Paul Robinson, Market Analyst

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