EUR/USD: Puts in demand ahead of Draghi's speech
|- The EUR/USD risk reversals indicate rising demand for EUR puts.
- Escalating trade tensions favor further downside in EUR/USD.
- Markets look to ECB forum in Portugal for rates clues.
The EUR/USD one-month 25 delta risk reversals fell to -1.05 today - the lowest level since May 30, indicating a rising implied volatility premium (rising demand) for the EUR puts (sell EUR). The risk reversals gauge stood at -0.23 on June 7.
The options market data indicates the investors are likely hedging/seeking downside protection against a deeper sell-off in the EUR/USD pair. As of writing, the spot is trading at 1.1642.
The common currency could revisit post-ECB low of 1.1543 and could possibly break below the recent low of 1.1510 on escalating US-China trade tensions and political uncertainty in Germany. Also, bears may hit the market with fresh offers if the ECB President Mario Draghi reiterates dovish end the central bank's QE program. The central bank chief will deliver introductory speech ECB Forum on central banking today.
EUR/USD Technical Levels
Resistance: 1.1645 (5-day moving average), 1.1687 (20-day moving average), 1.1852 (Thursday's high).
Support: 1.1618 (session low), 1.1543 (post-ECB low), 1.1510 (May 29 low).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.