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Jun 01 - 08:55 AM

EUR/USD - COMMENT-EUR/USD Mixed - Time To Insure The Downside?

By Martin Miller  —  Jun 01 - 07:00 AM

The EUR/USD's recent gains have been capped by technical and fundamental factors, but FX traders can use a simple option strategy to insure against a bearish reversal.

EUR/USD's recent peak was at the 1.0787 Fibonacci, a 38.2% retrace of the fall from 1.1495 to 1.0349, halted the rise.
The thickening and falling daily Ichimoku cloud, that currently spans the 1.0788-1.0955 region, could also limit the upside.
This increases the likelihood of a drop in the days ahead.

The euro edged further away from a monthly high and the U.S. dollar nudged higher, lifted by higher Treasury yields as global inflation worries flared anew. nL1N2XO0FW

Those seeking protection against a EUR/USD fall can buy a one-week 1.0710 EUR put option at a cost of 41 pips, priced with spot at 1.0723.
Profit potential is unlimited if spot is below the 1.0669 break-even point at the June 8 expiry.
Losses are limited to the 41-pip premium paid.

For more click on FXBUZ


Option Pricing Grid: Click here

Daily Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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