Even Euro Pessimists May be Under-Pricing the Currency’s Dangers
- Options point to weaker euro but not below year-to-date low
- Charts show that only a full return to risk can weaken dollar
Photographer: Chris Ratcliffe/Bloomberg
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Currency traders are paying little heed to analysts’ calls for a stronger euro, positioning instead for more weakness via options. But even they may be underestimating how rapidly it could tumble in the coming months.
The currency’s prospects are mired in multiple risks -- not least the European Union’s inability to assemble a fiscal response to the pandemic and the threat of a market meltdown in peripheral euro area, hit hard by the coronavirus.