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  • EUR/USD drops to lowest since May 2017 on Dollar demand.  
  • Risk reversals hit lowest since May 21, indicating rising demand for bearish bets.  

EUR/USD is on the defensive, courtesy of not-so-dovish ratee cut by the  Federal Reserve (Fed).  

The currency pair is currently trading at 1.1046, having hit a low of 1.1034 a few minutes before press time. That was the lowest level since May 2017.  

The US Dollar is solidly bid and could continue to push higher during the day ahead, as the US Federal Reserve cut rates by 25 basis points on Wednesday, but dashed hopes of further easing by referring to the rate cut as a mid-cycle adjustment.  

Growing demand for puts

One-month risk reversals on EUR/USD, a gauge of calls to puts on the common currency, fell to -0.412 in Asia, the lowest level since May 21.

A negative number indicates the implied volatility premium for the EUR puts (bearish bets) is higher than that for call options (bullish bets).  

The data indicates the investors are adding bets to position for further weakness in Euro.

The bearish sentiment would further strengthen if the final German and Eurozone PMI readings for July scheduled for released later today  are revised lower.  

Technical levels