Price action and flows in this forward-looking derivative can offer clues on sentiment and direction.

Implied volatility gauges actual volatility expectations.
It's off recent highs, but remains elevated above mid-February pandemic lows to flag simmering risk.
Benchmark one-month implied volatility went from 5.5 to 7.1 mid February-early March, and is now 6.5.

Risk reversals have been flirting either side of neutral in 2021, but recently extended EUR put over call (downside) implied-volatility premiums to highs since June.
One-month now 0.3 from 0.375 EUR puts Tuesday.

Flow data show many long EUR/short USD positions established in late 2020 were pared, and demand has picked up for EUR put/USD call options over recent weeks.
They would benefit from or protect against steeper EUR/USD declines.
However, volumes are tame and the strikes and maturities show a perceived target area of 1.17-1.16.
1.1695 is a 38.2% Fibo retrace of the 1.0636-1.2349 March-January recovery; 1.1602 is the Nov.
4 low since July - both big supports to likely attract buyers.

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