Forex technical analysis: The tail wags the dog as EURGBP options influence price action

2.3B expiry at 0.7100 seems to be a catalyst

No better way to have some fun, then to push a summer market around with an option expiry. There are a reported 2.3 billion expiring with a 0.7100 strike. The low for the day 0.71006. You got to think someone wanted to keep that price above that level and did so by pushing the spot price away.

That action led to traders covering by selling the GBPUSD and buying EURUSD and in turn makes for sloppy trading with the tail (i.e. the EURGBP), wagging the dog (the EURUSD and the GPBUSD).

The options have now expired at 10:00 AM, so how ever the card fell, the 0.7100 options have now settled with the winners and losers moving there chips. Do the buyers in the EURGBP against the 0.7100 unwind (the price peaked at 0.7136)? We don't know, so keep an eye on the pair for clues. However, the price action certainly demonstrates how summer time markets can make for some wild swings - especially if large option expires start to get involved.