FX Commentary: EUR/USD
EUR/USD consolidated after the early N.Y. move down to 1.5464.
Support between 1.5460 and 1.5450 encouraged profit taking activity, leaving the pair around 1.5480. Large size 1.5500 option strikes could fuel further short covering activity in to the NY option cuts.
Beyond the ‘cut’, price action should remain muted, with the focus on the FOMC policy decision. Softer crude price should leave risk on the euro downside, but we do not expect a significant break on the downside unless the Fed hardens it policy stance. A break of 1.5460 could be the catalyst for a move in to the 1.5300-1.5400 corridor, while some position traders are looking for a run on 1.5200 option positions, which lie underneath the 200-day moving average at 1.5215.