Brandt's Biggest FX Bet Is Short EUR/JPY as Yen Strengthens
Peter Brandt's firm holds its largest futures and FX position in a short EUR/JPY trade as the yen gains on intervention and rate expectations.
Several large FX option expiries are due for October 22, with EUR/USD at 1.1200 and USD/JPY clusters at 157.50 and 157.35.
Several key expiry levels are worth noting for today's session.
For EUR/USD, the key expiry is at 1.1200, roughly 40 pips away from the current spot price. The expiry could influence nearby price action, particularly if the euro faces renewed selling pressure. Given the dollar's choppier trading this week, moves could go either way. Although not initially highlighted, the 1.1300 expiry could become relevant if EUR/USD climbs higher later in the session. For now, that cluster likely has little immediate impact.
Essentially, EUR/USD sits in between levels, and the expiry influence hinges on the session's directional move. The 1.1200 expiry remains more significant and may draw hedging activity that holds EUR/USD above that level until the cut.
For USD/JPY, several large expiries are notable. The $1.7 billion strike at 157.50 is the most immediate, only 5 pips from the current price. Just below that is a $1.1 billion expiry at 157.35. This cluster may anchor price action around those levels before the cut. However, technical factors are equally or more important for USD/JPY at this point.
USD/JPY has repeatedly been unable to break above the 200-day moving average at 158.53. A decisive drop below swing region support near 157.50 could trigger a move lower toward 157.00. That move might then bring the expiries at that level into play if the decline continues.
Dollar sentiment is crucial and largely linked to bond market developments. Treasury yields are declining again, but market sentiment is very mixed, with US futures pointing lower amid tech stock weakness. Tesla's earnings call was poorly received, with its shares dropping almost 5% in after-hours trading.
Therefore, larger factors beyond the expiries will drive price action today. Traders should keep that perspective.
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Peter Brandt's firm holds its largest futures and FX position in a short EUR/JPY trade as the yen gains on intervention and rate expectations.
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