The danger zone for EUR/USD is 1.0863-50 -- a major Fibonacci retracement and option barriers, with a big reduction in existing option coverage below nL2N26L0SW.
But for all the talk of steeper potential declines, the price action in FX options doesn't support this argument, at least for now.
Options profit from volatility and rapid moves in any direction, so if the risk of a bigger EUR/USD fall was increasing, option vol premiums would rise, especially those with a downside bias.
So far, the implied vol curve is little changed and below recent highs.
There has been a small increase in the price of EUR puts over calls, according to risk reversals, which measure this premium, but it's still low.
Outright option flows also remain light and there's no rush to protect the downside.
Options aren't saying EUR/USD wont ease further, but price action suggest that for now at least, it could lack volatility and remain a grind, an environment that better suits cash shorts.