We're heading into the French election with the French-Bund spread at its highest level in more than 10 years, Euro Stoxx continue to underperform the S&P 500, and monetary policy divergence is skewed towards EUR/USD downside
Despite these developments, the eur-usd rate is trading at around 1.0730 as of the time of writing. Political risks could weight on the euro negative lists we just mentioned. Desks remain bearish EUR, with parity chatter back on the table
From a technical perspective, EUR/USD turns neutral after bouncing from recent lows and rejecting the lower BB. The usual summer dryness is likely to support seasonal signals in the near-term. A drop below 1.06 could point to further losses
Implied volatility is well bid, the 1w tenor is now 2.0 vols higher on Monday at 7.350% while 1m risk reversals continue to favour EUR/USD puts over calls by 1.20
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