Traders are souring on euro before Fed, ECB stimulus move

Bloomberg

Currency traders are wagering that even a potential European Central Bank announcement on its timing for ending bond purchases will fail to keep the euro rallying.
The euro is on track to gain about 1 percent this week versus the dollar, for its best performance since February. While it’s perked up from the weakest levels of 2018 on signals from officials that the ECB is about to debate when to taper stimulus, the options market is demonstrating little confidence in the shared currency’s outlook.
Risk reversals for the euro — a put-call barometer of positioning and sentiment — are below par for all maturities. That indicates investors are paying an added premium to protect against euro weakness versus the dollar heading into a week when both the Federal Reserve and ECB are set to hold meetings.
“We’ve gotten what we’re going to get out of the ECB announcement in terms of euro upside,” said Robert Sinche, global strategist at Amherst Pierpont Securities LLC. “Going into the second half of the year, the markets will have to come to grips with the fact that the ECB announcement next week — if it comes — is likely to be their last policy move for
potentially a year.”