FX option expiries for 24 February at 10am New York include key levels for EUR/USD at 1.0500 and 1.0525. Recent German election results have strengthened the euro, with Friedrich Merz’s CDU/CSU alliance set to lead coalition negotiations.
The CDU/CSU is typically in favour of Germany’s debt brake. However, collaboration with the Greens may necessitate reforms that could increase public investment in areas like infrastructure and green energy.
Potential changes to the debt brake could enhance growth, positively impacting the euro. Germany’s low debt-to-GDP ratio alleviates immediate concerns. The euro may test the 1.0500 level, with expiries providing support for a potential upside.
This means that there are key levels for the euro against the dollar that option traders should monitor, particularly around 1.0500 and 1.0525. These are where large option contracts expire, which can influence short-term price movements. If the euro remains near these levels at expiration, traders with positions tied to these options may adjust their strategies, reinforcing price activity around these figures.
Friedrich’s CDU/CSU’s success in the election has strengthened the euro, as markets anticipate pro-business policies. His party generally supports maintaining low debt levels, yet a coalition with the Greens may lead to changes that increase government spending in areas such as renewable energy and infrastructure.
If negotiations result in adjustments to Germany’s debt rules, this could encourage additional investment, potentially boosting the country’s economic performance over time. A stronger economy often translates to a more attractive currency, which helps explain the euro’s recent momentum. Concerns over debt spiralling remain low thanks to Germany’s favourable debt-to-GDP ratio, meaning markets see little immediate risk of excessive borrowing.
With option expiries at 1.0500, the euro has a natural area of support. If buying interest builds around this level, prices may hold or even push higher as traders position accordingly. However, movement through this zone—and whether expiries exert lasting influence beyond the short term—will depend on broader macroeconomic developments and the evolving policy discussions in Berlin.
