Friday has seen a real extension of EUR lower, driven by European politics and market risk sentiment. Most of the action is in EURXes not in EURUSD, although the USD is well bid in what is looking like a traditional cross market risk off tone. The skew to puts (premium for buying EURUSD puts vs calls) was moving lower - towards puts - into the week (1 month 0.6 vols premium for puts) and in Friday's session has moved to 1.5 vols to puts - the lowest since 2022. Flow wise, the team thinks that CIA long USD positioning was mostly reduced along with hedge fund longs so there has been space for clients to get longer and chase the USD higher (EURUSD lower), but specifically to EUR the team has also seen EURCHF and EURJPY downside as is normal in a risk off environment. 1.0670 / 1.0645 / 1.06 next technical levels below to watch for breaking. - UBS Strategy
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