The options market is heading into the ECB with EUR/USD one day volatility at the lowest reading over the course of last year. O/N vol stands at 7.322%, the April meeting had seen the tenor above 10.0%
ECB policymakers have signaled the central bank is ready to reduce interest rates, however, traders do not expect ranges to be wide. This could be due to a potential data dependency approach from Lagarde while swap traders have brought Fed rate cut bets forward
EUR/USD is not known for recording abnormal moves during ECB decisions. In fact, the cross is more sensitive to FOMC rate decisions over the course of last year
1w tenors now cover ECB rate decision, U.S. CPI, and the FOMC rate decision. Risk reversals show EUR/USD puts holding a premium of 5bps to calls, this is below the 1y average of 13bps
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