Search ForexCrunch

One-mont risk reversals on EUR/USD, a gauge of calls to puts, has retreated to 0.15 from 0.47 in the past six trading days – a sign of weakening demand for call options or bullish bets on the common currency. 

The bullish bias has weakened, possibly due to speculation that the European Central Bank is growing uncomfortable with the euro’s near 6% appreciation against the dollar from its June low.

While the central bank is widely expected to keep key policy tools unchanged on Thursday, some traders expect ECB’s President Lagarde to talk down the single currency, given the inflation has turned negative for the first time since 2016.