Key facts
- EUR/USD has option expiries between 1.1575 and 1.1650.
- The 1.1600 strike for EUR/USD is expected to be the most impactful.
- USD/JPY has an option expiry at the 160.00 level.
- Intervention risks are a key focus for USD/JPY.
- US-Iran developments and the US jobs report are also market-moving factors.
FX option expiries for the June 5th 10 am New York cut include EUR/USD expiries between 1.1575 and 1.1650, with the 1.1600 level anticipated to have the most significant impact. This level is expected to help keep price action within a range during European trading, especially given recent price action resembling a floor near the figure level. However, headline surprises could alter this dynamic. For USD/JPY, there is an expiry at 160.00, a level that has been a focal point throughout the week due to intervention risks. The article suggests that the willingness of traders to test Japan's Ministry of Finance and Tokyo officials' appetite to intervene are bigger influences than the expiries themselves. The author notes that the question is when and where Japan's Ministry of Finance will draw a line on price moves, implying that the invisible hand will be a larger factor. Other key market drivers mentioned include US-Iran developments and the upcoming US jobs report.
US President Trump stated that Iran talks are going well and reiterated that almost all of Iran's leadership has been wiped out, while also noting Iran has no navy or air force. He warned that if Iran killed US troops, it would restart the war quickly, and that the Israel-Lebanon conflict is interconnected with Iran. Trump also indicated progress on Lebanon and expressed honor in meeting Iran's Supreme Leader if a deal is made. Washington has demanded Tehran deliver its response by the end of the week and stated no progress in negotiations, according to Al Hadath citing Israeli Channel 12. Washington informed Tehran that the signing ceremony for the agreement would take place in Switzerland, warning "either an agreement or a military strike". An Israeli official quoted by the Israeli Broadcasting Authority stated Washington "will understand our position" if the agreement with Lebanon is not implemented. The US State Department issued a security alert for all Middle Eastern countries due to "potential for hostilities".
Iranian Foreign Minister Araghchi commented that Iran and Oman will regulate the management of the Strait of Hormuz based on international law standards and will exchange views with Persian Gulf countries, with the final decision between Iran and Oman. He also stated that US bases in the region are targets for retaliation. Iran insists 50% of frozen assets must be made available upon signing an MOU. Iran's Supreme Leader advisor Rezaei believes Trump wants to pressure Iran into accepting his conditions and keep Iran in a vague state, noting ambiguities in the current draft. Rezaei also affirmed Iran's firm support for Hezbollah and its readiness to defend its interests. The IRGC stated Iran's initial condition for a ceasefire was a ceasefire on all fronts, including Lebanon, and that the region would not be stable unless Israel withdraws from Lebanon.
Oman suspended crude oil loading at Mina Al-Fahal terminal following a suspected drone attack. A US official told Al Jazeera that a ceasefire with Iran is in place, but they will continue to protect their forces and impose a blockade on ports. The official stated there is an open shipping route through the Strait of Hormuz, with approximately 1,000 ships having crossed since the April 8th ceasefire. Nearly 40 ships previously stranded in the Persian Gulf have exited through the Strait of Hormuz over the past three weeks, coordinating with the US Navy. Israeli forces struck a tent shelter in Khan Younis, killing one person. Hezbollah rejected the Washington agreement between Lebanon and Israel, claiming drone and missile attacks on Israeli bases and the destruction of six Merkav tanks. The US House rejected a war powers resolution on Lebanon.