Sept 16 (Reuters) - The dollar's latest slide has reignited demand for FX options, with short-dated EUR/USD and GBP/USD premiums surging as traders reposition. FX option implied volatility has been trading at long term lows, which suggests there is limited potential for deeper declines and potential value to be had, especially with key FX event risks looming, including data releases and Wednesday's Fed meeting. EUR/USD 1-month implied volatility has regained 7.0 from 6.5 - its lowest levels since November. In terms of premium, that's an increase of 0.6% or 8 USD pips - equivalent to 16,000 euros on a typical 30 million euro trade. GBP/USD 1-month expiry implied volatility has increased from 6.35 to 6.8 this week for a similar jump in premium. Implied volatility has risen across all expiry dates, though gains have been more modest in longer tenors, reflecting a broader repricing of risk. Should the USD slide persist - especially with momentum - expect short-dated implied volatilities to extend their rebound, with broader option markets likely to follow. AUD/USD could accelerate higher on a break of 0.6700, with recently flagged topside "free bets" already delivering. A few calls for a 50 basis point Fed cut on Wednesday could deepen USD losses and spark a fresh surge in implied volatility - if realised. For more click on <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 1-month expiry FXO implied volatility https://tmsnrt.rs/4681CAe ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Richard Pace is a Reuters market analyst. The views expressed are his own) ((Richard.Pace@thomsonreuters.com))
