Option traders are starting to bet the euro that it will break the $ 1.10 psychological barrier. The reason for the speculation is the preparation by the ECB of a new stimulus package. The bank is determined to act against the backdrop of a weakening global economy and the ongoing tensions between the US and China.
The chances of the euro hitting $ 1.10 by the end of August rose to 49%, three times more than the previous week's measurement. Avoiding the risk shows that traders are more bearish about the euro in the coming weeks and in the long run.
Short-term volatility remains at its mid-level, indicating that traders are preparing for news about monetary policy. We have a Fed meeting in Jackson Hole next week, but market participants don't think it will shake the spot market because of the stable volatility. However, the search for options that are against the euro is gaining momentum.
The headwinds to the single currency may be triggered if the ECB outperforms the Fed in monetary easing, the risk of No-deal Brexit and the US-Eurozone trade war, as well as weaker economic data.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.