EUR/USD: Put value at 7-week high, focus on German industrial production

EUR/USD risk reversals show a sharp rise in the implied volatility premium for the EUR put options (bearish bets).
Focus on German industrial production and Italy-German yield spread.

Omkar Godbole FXStreet Contributor

The demand for the EUR put options has risen sharply in the last few days.

The one-month delta risk reversals (EUR1MRR) have dropped to -1.05 (the lowest level since June 19) vs -0.55 seen on July 31, indicating a pick-up in demand or implied volatility premium for the EUR puts (bearish bets).

The data add credence to the pennant breakdown seen on Thursday and suggests the investors are expecting a deeper drop in the spot.

The immediate support at 1.15 could be put to test today if the German industrial production prints below the forecast of a 0.5 percent month-on-month drop. The common currency could also take a beating if the fears of the Italian debt crisis push the 10-year Italy-German bond yield differential higher.

At press time, the EUR/USD pair is trading at 1.1555.

EUR1MRR

EUR/USD Technical Levels

Resistance: 1.1584 (10-day moving average), 1.1634 (10-day moving average), 1.1669 (50-day moving average).

Support: 1.1530 (previous day's low), 1.1508 (June 21 low), 1.1463 (100-week moving average).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	Expanding
1H	Bullish	Neutral	Low
4H	Bearish	Neutral	Low
1D	Bearish	Neutral	Expanding
1W	Bullish	Oversold	Expanding
Updated Aug 7, 03:45 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD surges to multi-day peaks past 1.3250

GBP/USD leaves behind Friday’s small pullback and advances past 1.3250 level, or five-day highs, on Monday. Cable’s upside follows extra losses in the Greenback, while traders continue to assess the geopolitical front and upcoming key events.

EUR/USD softens to near 1.1400 as ECB tightening bets fade

The EUR/USD pair trades with mild losses around 1.1415 during the early Asian session on Tuesday. The Euro softens against the US Dollar as traders reduce their bets on the European Central Bank rate hikes this year.

Gold crashes with Japanese Yen as stops likely triggered

Gold is down nearly 1.50% so far in Tuesday’s Asian trading, sitting at a fresh seven-month low as the key $3,950 psychological barrier gave way amid a renewed wave of selling.

Bitcoin stalls at $60K as buyer conviction fades, Strategy authorizes BTC sales

Bitcoin is trading around the $60,000 level on Monday after a sharp decline last week. With the top crypto struggling to recover, analysts suggest the market remains firmly in defensive territory as investors await stronger signs of demand.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.

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.