The models are broken
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.
Steen Jakobsen,
Chief Investment Officer
Head of FX Strategy, Saxo Bank Group
Summary: EURUSD is heavy near range support and may push lower still as the Eurozone outlook sours more quickly than the outlook for the US, where the Fed continues to actively tighten. We trade the risk for lower EURUSD levels via a put option, given very low implied volatility.
Instrument: EURUSD put option, strike 1.1200, expiry May 15
Price Target: Spot price below 1.1000
Market Price: 72 pips, or 0.0072 (Spot ref: 1.1320 on Feb 13)
Entry: 72 pips, or 0.0072 (Spot ref: 1.1320 on Feb 13)
Stop: n/a
Target: Price target: Spot price below 1.1000
Time Horizon: Short-term
Risks: risk to this trade is 100% loss of the amount paid up front for the option premium.