FX options have been correctly predicting the recent price action in EUR/USD, so what next for the currency pair according to its forward-looking derivative?

EUR calls/USD puts were a favoured option trade in early January and many of those with strikes around 1.07-1.08 and short-dated expiries were pared for profit after the post-Fed bounce to 1.1034.
However, the popular EUR calls with attached knock-out triggers at 1.1100-1.1200 and above are still in play.
This might suggest holders of EUR calls think they have seen the near-term peak for EUR/USD and that any further gains will remain hard-fought.

There's been a slight reduction in EUR put/USD call strike premium since the central bank meetings which may alleviate some of the fears about deeper spot declines, especially when combined with the big drop in implied volatility as risk premiums were pared.
One through 3-month expiry implied volatility is at longer-term lows, and while that remains the case EUR/USD traders should expect lower actual volatility.

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