FX options hint at potential for euro shock
Months-long rally powered by ongoing hikes, but euro-bears fear economy will crack
After a dramatic six-month surge in the euro, some market participants are bracing for a change of fortune – and citing a swing in the options market as a warning sign.
Euro-bulls have been backing the currency against the US dollar because the European Central Bank is expected to continue hiking, while US rates are widely believed to be at or near their peak. Euro-bears believe the European economy is not robust enough to withstand further increases. The ECB’s deposit rate is currently at 3%
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