One-month risk reversal for the EUR/USD, a gauge of calls to puts, dropped the most since March 04 by the end of Tuesday’s North American trading session. It’s worth mentioning that the options market catalyst drops for the third consecutive day with the latest update.
Although the pre-Fed mood restricts immediate EUR/USD moves, recently strong data and inflation expectations justify the bearish bias of options market traders.
Read: Federal Reserve Preview: First up, then down? Playbook for trading the Fed
Risk reversals flash the -0.150 daily level, favoring EUR/USD bear by the press time, according to data provided by Reuters. The negative reading indicates call options are drawing a lesser premium (option price) than put or bearish bets.
Technically, bounced off the 1.2100 threshold but fails to keep the recovery moves, which in turn joins sluggish MACD signals to repeat Tuesday’s pullback from the support-turned-resistance line from May 05, near 1.2145. That said, the currency pair trades around 1.2123 by the press time of early Wednesday.
Read: EUR/USD Price Analysis: Corrective pullback fades below previous support, 200-SMA