Euro falls to near two-month low as options traders bet on further weakness after Fed hike
The euro fell to its lowest level in nearly two months against the US dollar, declining for a third consecutive session. The drop follows the Federal Reserve's latest interest rate hike, which has led options traders to increase bearish bets, with about 60% of notional option volume now positioned for euro weakness. High energy prices and political uncertainty in France and Germany are adding further pressure on the eurozone's growth outlook.
Editorial responsibility
- No named human review is recorded for this page.
- Reports are grouped by semantic similarity and deterministic rules. Language models may assist titles, summaries, translation and cross-source analysis; the page reads the event directly, while its address stays stable when the title changes.
- Summary covers the current reports
Cross-source coverage
Reporting timeline
Euro falls to near two-month low as options traders increase bearish bets
The euro fell to its lowest level in nearly two months against the US dollar, declining 0.4% to $1.1409, and is on track for a third consecutive daily drop. Options market indicators show investor sentiment turning increasingly bearish, with positions betting on a weaker euro by year-end reaching their highest since mid-August. The shift follows the Federal Reserve's latest interest rate hike, which has reinforced expectations of continued US monetary tightening. This has weakened the monetary policy divergence trade that had supported the euro through most of the summer. Additionally, persistently high energy prices are adding pressure on the eurozone's growth outlook, even as oil prices are set for a sixth straight daily decline. Data from the Depository Trust & Clearing Corporation (DTCC) shows that bearish euro positions accelerated after the Fed's decision. While options positions were roughly balanced after the European Central Bank's recent rate hike, approximately 60% of notional option volume has since been placed on euro weakness following the Fed meeting.
Read sourceEuro Falls to Near Two-Month Low as Options Traders Increase Bearish Bets
The euro fell to its lowest level in nearly two months against the US dollar, declining for a third consecutive trading session. The currency dropped 0.4% to $1.1409. Options market indicators show investor sentiment turning increasingly bearish, with bearish positions betting on a weaker euro by year-end reaching their highest level since mid-August. The move comes after the Federal Reserve raised interest rates, prompting traders to increase bets against the euro. The monetary policy divergence trade that had supported the euro through most of the summer is weakening as markets further price in continued Fed tightening.
Read sourceEuro Falls to Two-Month Low as Options Market Bets on Further Downside Risk
The euro has fallen to a two-month low against the US dollar, with options market data showing a significant increase in bearish bets. The decline is driven by the Federal Reserve's latest interest rate hike, which has reinforced the dollar's yield advantage, and by high energy prices that are suppressing the eurozone economic outlook. According to the article, about 60% of euro option notional value is now betting on a weaker euro following the Fed meeting. Brown Brothers Harriman strategist Elias Haddad notes that while other central bank tightening may limit the dollar's upside, US growth advantages keep dollar risks tilted higher. European Central Bank official Joachim Nagel warned that persistently high energy prices may force rates into restrictive territory. Political risks in France and Germany add further pressure. However, Deutsche Bank analysts expect the euro to remain range-bound, citing global economic resilience and downside risks for the dollar as limiting factors for euro losses.
Read sourceShow 2 older updatesHide older updates
Euro Slips to Near Two-Month Low on Energy and Political Risks
The euro fell to its lowest level in nearly two months against the U.S. dollar, declining for a third consecutive session to 1.1426. The drop follows the Federal Reserve's latest interest rate hike, which has led options traders to increase bearish bets on the euro, with about 60% of notional principal now wagering on further weakness. The move undermines the 'policy divergence' theme that had supported the euro over the summer. High energy prices are adding a headwind to the eurozone's growth outlook, even as oil prices fall. European Central Bank official Joachim Nagel warned that persistent high energy costs could force rates into a mildly restrictive territory. Political uncertainty in France and Germany is also weighing on the currency. Morgan Stanley strategist Matthew Hornbach cited higher U.S. rates and political risk premiums as barriers to euro gains. However, Deutsche Bank analysts see limited downside, forecasting range-bound trading due to resilient global growth and significant tail risks for the dollar.
Read sourceEuro hits near two-month low on energy and political risks; traders bet on further weakness
The euro fell to a near two-month low against the U.S. dollar, declining 0.2% to 1.1426, as the Federal Reserve's latest rate hike reinforced expectations of further tightening, eroding the policy divergence theme that had supported the euro. Options data from DTCC shows that since the Fed meeting, about 60% of notional principal has been bet on euro weakness, with bearish positioning extending further out the curve. High energy prices are adding to headwinds for the eurozone growth outlook, even as oil prices fall. European Central Bank Governing Council member Joachim Nagel warned that persistent high energy prices could force rates into mildly contractionary territory. Political uncertainty in France and Germany is also weighing on the euro. Morgan Stanley's Matthew Hornbach said higher U.S. rates and political risk premium make it harder for the euro to rise. However, Deutsche Bank sees limited downside, forecasting range trading due to resilient global growth and significant dollar tail risks.