• FX option prices spiked higher last week as French debt concerns hit EUR and forced option short covering

• 1.1300 option barrier breach fuelled demand for strikes in the 1.1100 zone last week

• Recall hedge funds were huge buyers of downside digital type options - 6-12-month expiry 1.07-1.06 strikes

• 1.1200 option barriers were breached in Asia Monday, forcing more short gamma covering and option price gains

• Implied volatility eyes March 2026 peaks - above takes prices to highs since July 2025 - up from multi year lows mid Sept

• Downside over upside strike premium on risk reversals eyes levels last seen late 2022 - 1-month was neutral in mid Sept

• Friday's FX options wrap - Euro puts soar on French debt fears
EUR/USD 25 delta risk reversals


EUR/USD FXO implied volatility

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