Traded volatility levels from the FX option market can signal whether investors are actively taking a view or passively folding their cards on existing positions, ING's FX analyst Chris Turner notes.

Eurozone faces a heavy slate of European Central Bank speakers

"Three-month traded EUR/USD volatility continues to sink and is now below 6%. It's hard to see what will stop this from falling to the summer 2024 lows of 5.30%. Combined with the three-month EUR/USD risk reversal dropping back to flat (from a 1% skew for EUR/USD calls in May) is a sign that EUR/USD bulls have just about given up. Market consensus is for 1.18 by year-end. We think EUR/USD could rally slightly more than that on a dovish Fed – but those views are under pressure."

"Expect the dollar story to continue driving EUR/USD this week. However, in the eurozone, we do get a heavy slate of European Central Bank speakers. This starts with Chief Economist Philip Lane at 1:00pm CET today. ECB rhetoric looks unlikely to help EUR/USD, however. The debate leans more towards whether eurozone inflation undershoots and the ECB requires another rate cut."

"We suspect that 1.1500 could prove the bottom of the EUR/USD range this week, though that will require some softer US jobs data to provide some breathing space."