EUR/USD: More volatility on the USD upside – Société Generale

FXStreet Insights Team FXStreet

This time last year, the FX futures market was reducing EUR longs. More recently, EUR positioning is very small, Société Generale FX strategists note

Risk reversals to return towards flattish levels

“EUR/USD’s acceleration above 1.10 over the past couple of weeks has pushed up both realised and implied volatility.”

“As the FX skew usually predicts more volatility on the USD upside, the switch to positive of short-dated EUR/USD risk reversals is an inversion.”

“This move is consistent with the positive vol/spot correlation, but as the spot stabilises, we’d expect risk reversals to return towards flattish levels.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD flirts with two-week tops around 1.3270

GBP/USD makes a U-turn and adds to Monday’s uptick, advancing to the area of two-week highs near 1.3270 on Tuesday. Meanwhile, Cable’s better tone follows a loss of upside traction in the Greenback, always amid the sharp rally in USD/JPY.

EUR/USD stays offered, flirts with 1.1400

EUR/USD manages to reverse the early drop and now trades with marginal gains near 1.1420 on Tuesday. The pair’s recovery comes in response to some loss of momentum in the US Dollar.

Gold keeps the positive mood above $4,000

Following multi-month lows near $3,950, Gold now manages to regain some composure and reclaim the area beyond the key $4,000 yardstick per troy ounce on Wednesday. Still, any meaningful recovery appears limited as a broadly firmer US Dollar and rising US Treasury yields weigh on the yellow metal.

Ripple defends critical support, Stellar extends recovery

Ripple (XRP) trades around the key $1.00 psychological level, consolidating as the token awaits its next directional catalyst. Stellar (XLM) extends its recovery above $0.178 after posting modest gains at the start of this week.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.