USD continue to trade under pressure as rates volatility has come lower as US rates has topped out and been range trading for the last weeks. USD was sold of against all G10 currencies yesterday and EURUSD took out the 1.2000 resistance and traded up to current levels around 1.2070.
We have seen good demand to buy USD put options in most USD pairs which has moved ATM vols higher and risk reversal to move more in favor for USD puts. 1 month EURUSD has moved up from 5.45, which was 1 year low, on Friday to trade at 6.0 at the time of writing. EURUSD 1 month risk reversal trades at 0.2 for EURUSD calls, up 0.1 from Friday.
Now when the 1.2000 resistance is taken out and USD has built up some momentum the next target is the highs from the start of the year at 1.2350.
Today we will look at what different bullish EURUSD strategies you can get if spending around 50 pips in the 1 month.
Buy 1 month 1.2160 EURUSD call
Cost 50 pips
Buy 1 month 1.2120 EURUSD call
Sell 1 month 1.2320 EURUSD call
Cost 51 pips
Buy 1 month 1.2100 EURUSD call in 1 mio
Sell 1 month 1.2340 EURUSD call in 2 mio
Cost 50 pips
Buy 1 month 1.2070 EURUSD call with knock-out at 1.2385.
Cost 49 pips
Buy 1 month 1.2100 EURUSD call
Sell 1 month 1.1925 EURUSD put
Cost 47 pips
Spot ref.: 1.2070