ING remarks on the euro come via eFX.
For bank trade ideas, check out eFX Plus .
- "With EUR/USD closing in on parity we are getting questions from customers as to what a break of parity could look like and how far EUR/USD could fall? 1.00 is probably the biggest psychological level around in FX and fireworks look likely. The options market would size up a worst-case outcome as something like 0.95 over the next month," ING notes.
- "One example here could be a speculator wanting to position for a lower EUR/USD, but wanting to cheapen the structure by having a 'Knock-out' at 1.00. Should 1.00 trade, the speculator's position evaporates and questions whether he/she wants to re-apply bearish EUR/USD strategies down at these levels. Were 1.00 to break we would expect volatility to pick up sharply and most likely EUR/USD to gap lower.
- How low could EUR/USD go over the next four weeks? Here we look at the FX option markets for expected ranges. Based on the current pricing of EUR/USD implied volatility, a one standard deviation move could see EUR/USD as low as 0.9873, while perhaps a worst case, two standard deviation outcome could see EUR/USD as low as 0.9545," ING adds.
---
EUR/USD update ... energy crisis is forefront in minds at present:
