ANZ: Protected-haven demand boosts EUR as choices market alerts upside surge

ANZ highlights that safe-haven flows are more and more favoring the euro amid U.S. commerce coverage turmoil, with the choices market signaling aggressive upside positioning. The EUR/USD danger reversal curve is at its most bullish in 5 years, pointing to mounting expectations for additional euro appreciation.

Key Factors:

• Shift in International Confidence:U.S. commerce uncertainty is eroding confidence within the USD, whereas Europe seems insulated because of the tariff pause and Germany’s fiscal shift.

• Protected-Haven Flows into EUR:The euro is rising as a defensive play, particularly with investor concentrate on stability and diversification away from USD dangers.

• Choices Market Indicators:The three-month EUR/USD danger reversal (calls vs places) is at a five-year excessive, indicating sturdy demand for near-term euro upside.

• Volatility Time period Construction Inversion:Quick-dated EUR calls at the moment are costlier than longer-dated ones—exhibiting merchants are speeding to purchase upside publicity within the close to time period.

• Coverage Already Priced In:ANZ’s forecast for 75bp of ECB cuts in 2025 is totally priced, that means fee coverage is unlikely to drive EUR decrease within the close to time period.

• Pullback Threat:A modest retracement to 1.12 is feasible if U.S.-Europe commerce negotiations enhance, however momentum stays on the upside.

Conclusion:

The euro’s rally is being fueled not simply by fundamentals however by option-driven momentum, with near-term volatility and danger reversals strongly favoring extra positive factors. Except commerce dangers dissipate considerably, EUR/USD is poised to stay properly bid, with ANZ pointing to continued resilience and upside potential.

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This text was written by Adam Button at www.ubaidahsan.com.



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