• Panic over for now but options still price EUR/USD downside risk; spot holds above 1.1200 after Monday's 1.1161 low

• Implied vols lower: 1-month settles 6.35 from Monday's 7.3 high since March and 1-year eases to 6.9 from 7.3

• However, current levels still high by comparison to 1-month multi year low at 4.5 in mid-September, with 1-year around 6.0

• Premium for EUR puts over calls via risk reversals is lower too - 1-month 0.95 after testing the March peak at 1.7

• However, that's still a solid downside strike risk premium when compared to a neutral directional bias in mid September

• Huge 1.1100 - 1.1000 option barriers mark the danger levels - a break below risks deeper and more disorderly declines

• Related - EUR/USD: Relief rally - sellers await
EUR/USD FXO implied volatility


EUR/USD 25 delta risk reversals-

(Richard Pace is a Reuters market analyst. The views expressed are his own)