FX traders should be mindful that EUR/USD is vulnerable to a slump in the days and weeks ahead, as the Russian invasion of Ukraine and uncertainty about the speed and timing of European Central Bank rate hikes keeps euro's downside risks alive.
The ECB will be in no hurry to raise interest rates and any move will be gradual, ECB President Christine Lagarde said on Thursday, even as another policymaker made the case for one and possibly two rate moves later this year. nL2N2VK0NO
EUR/USD continued its recovery on Thursday to peak at 1.1137, faltering ahead of the major 1.1151 Fibo, the 50% retrace of the 1.1495 to 1.0806 2022 drop.
The scope is for a drop through the 1.0972 Fibo, 50% retrace of the 1.0806 to 1.1137 recovery.
Traders who want to protect against a EUR/USD fall can buy a one-week 1.1060 EUR put option at a cost of 54 pips, priced with spot at 1.1063.
Profit potential is unlimited if spot is below the 1.1006 break-even point at the March 25 expiry.
Losses are limited to the 54-pip premium.
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