EUR/USD Analysis: Options clues hint more upside in EUR
|Optimism seems to have gripped the market participants as indicated by the rise in the open interest (OI) or open positions in the 1.22 Call expiring on Jan. 6.
EUR/USD EUUF8 Open Interest Change: Current (Dec 4 - Prelim) vs Dec 1
| Call Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 42,557 | 1,157 | 14,311 | 53 | 28,246 | 1,104 |
| Put Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 34,775 | 282 | 5,545 | 11 | 29,230 | 271 |
Open interest change
Source: CME
- The open interest in call options increased by 1157 contracts yesterday, while the OI in puts rose only by 282 contracts.
- Also, 1.22 call added 570 contracts, taking the total outstanding positions to 3219 contracts.
- Max open interest is seen in 1.19 call and 1.18 put. A significant buildup is also seen in 1.21 call and 1.22 call.
Clearly, this indicates there is room for a rally towards 1.22 levels. The rise in the OI in the 1.22 strike call coincided with the pair's recovery from the weekly 5-MA support yesterday.
Weekly chart
The above chart shows the odds are stacked in favor of a bullish move.
- Bullish 5-MA & 10-MA crossover, 5-AM acting as a strong support.
- Higher lows pattern as indicated by the rising trendline.
- Bullish 50-MA & 100-MA crossover.
View
- The spot looks set to revisit 1.20 and possibly extend gains to 1.22 levels.
- Two consecutive daily closes below 1.18 would abort the bullish view. This is because the max OI buildup is seen in 1.18 strike put. So a break below the same could force put writers to unwind their shorts, leading to a bigger drop in the spot.
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