Euro is wobbling after almost reaching 1.2900
After the Euro has staged its biggest rally in quite a while, we are seeing the single European currency shedding ground in late European and US trading ending the session close to daily lows around 1.2664. Current prices of about 1.2685 are likely to provide good opportunities to buy daily puts for tomorrow.
There has been little ground uncovered by the latest market events unfolding around the globe. As oil prices are hitting multiyear lows, and stocks falling in a dramatic fashion we are looking at the US dollar getting back in demand. We are likely to see that trend continuing tomorrow as the momentum on the upside is lost.
Euro bulls have been contempt with the single European currency rallying sharply in the wake of dramatically higher volatility across the board. However after traders have been very happy with today's volatility and profit opportunities its time to look at tomorrow and decide where is this pair going after all.
In our view there are two scenarios as usual, but one of them is more likely to happen than the other. We are seeing the Euro possible dropping further lower tomorrow, unless we see an hourly close above 1.2720. For now we would be buying daily puts for tomorrow's expiry at 20:00 GMT.
The market has been shattered by the speech by Mario Draghi which said again that the European Central Bank could take more steps to stimulate the economy. For now there seems to be some necessity for that to happen - the European economy has been losing steam all year long and German GDP for next year got downgraded.
On the other hand we are seeing additional pressure on the US dollar as the Federal Reserve officials speaking this week to the media, have been less optimistic about rising interest rates which would lead to a stronger dollar. All in all remember, that if you see that close above 1.2720 on an hourly basis, its wise to buy daily calls for Friday.