US DOLLAR PRICE VOLATILITY REPORT: OPTIONS IMPLIED USD TRADING RANGES FOR NEXT WEEK
- The US Dollar recorded a formidable rally during the last 5 buying and selling days and has pushed the DXY Index to check its downtrend resistance line and 50-day easy transferring common
- Foreign money volatility is at extremes with EUR/USD 1-week implied volatility of three.67% at its lowest degree on document courting again to 1999
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I identified in Thursday’s US Dollar Price Volatility Report that USD value motion may gain advantage from a protracted extension increased. This expectation was largely predicated on resurfacing draw back threat confronted by the Euro amid rising uncertainty stemming from commerce uncertainty and the excellent risk that Trump could slap further tariffs on the EU items.
The discharge of worse-than-expected preliminary Eurozone PMI data from IHS Markit for November would possibly function one other fundament driver that explains Friday’s sharp drop in spot EUR/USD costs and surge within the DXY Index. November US PMI knowledge topped consensus estimates on each companies and manufacturing, which is detailed on the DailyFX Economic Calendar.
US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (MAY 10, 2019 TO NOVEMBER 22, 2019)
The bounce within the US Greenback has pushed the DXY Index to check the downtrend resistance line prolonged from the October 01 and November 13 swing highs along with its 50-day simple moving average. A continued advance in USD value motion may see the broader US Greenback Index retest the zone of confluent resistance close to the 98.45 space the place the month-to-date excessive at the moment resides.
Whereas this zone of technical resistance has potential to stop additional upside within the US Greenback, the MACD indicator highlights bullish divergence. Topping the 98.45 degree could open up the door to focus on the 61.8% Fibonacci retracement of the US Greenback’s current bearish leg earlier than the 99.00 deal with and 78.6% Fib come into focus. Technical assist might be offered by the short-term uptrend line connecting the November 01 and November 21 swing lows in addition to the 200-day SMA.
US DOLLAR IMPLIED VOLATILITY & TRADING RANGES (1-WEEK)
It goes with out saying that anticipated foreign exchange volatility is extremely suppressed judging by 1-week choices implied volatility readings throughout main US Greenback currency pairs. Particularly, 1-week EUR/USD implied volatility of three.67% is the bottom on document courting again to 1999. On an analogous notice, 1-week implied volatility for USD/CAD is at its lowest degree since 2014.
Likewise, 1-week implied volatility on USD/JPY and AUD/USD readings of 4.21% and 5.30% respectively seem exceptionally low. That mentioned, I’m waiting for a possible spike in foreign money volatility, which may create a significant tailwind for USD value motion in gentle of the US Greenback’s posturing as a safe-haven currency. Spot GBP/USD is anticipated to be probably the most risky G7 foreign money subsequent week with an implied volatility of 6.61%.
Choices-implied buying and selling ranges are calculated utilizing 1-standard deviation (i.e. 68% statistical likelihood value motion is contained inside the implied buying and selling vary over the desired time-frame). Take a look at this text on commerce the top 10 most volatile currency pairs for extra perception.
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