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EUR/USD risk reversals shed bearish bias

A key metric shows the options market is no longer bearish on EUR/USD. 

One-month risk reversals (EUR1MRR), a gauge of calls to puts on the common currency, rose to zero on Wednesday, having bottomed out at -0.55 on Feb. 18.

The surge indicates the demand or the implied volatility premium for the EUR put options (bearish bets) has weakened over the last seven trading days. 

In fact, the zero reading indicates both call and put options are claiming equal volatility premium, a sign the investors have turned neutral on the common currency. 

A bullish shift in the sentiment would be confirmed if the risk reversals rise above zero. 

EUR/USD is currently trading near 1.0910, having hit a low of 1.0778 on Feb. 20.


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