💶⚠️Euro Risk Reversals Do Not Favour Further Upside: Cable FX Macro

• One has to give credit to the euro resilience on the latest global/geopolitic risks for holding ground against the dollar and the Swiss franc. EUR/USD did not even reach 1.1500 lows, while EUR/CHF stood closer to 0.9400 as the Middle East conflict escalated.

• However, the options market is not fully convinced and this is not recent, call/put premium in the 1m tenor has been paring for the last couple of weeks. On Monday, interest to hold 1m EUR/USD calls over puts reached the lowest level since April, it now stands at 24.5 basis points.

• Traders are looking beyond the recent data points, and we will get further clarity from the Fed tomorrow. Also, it may be that the tariff policy pass through to consumer and producer prices is expected to be reflected in the June data. Not to mention, the recent rise in oil prices will support higher for longer inflation. The desk at J.P. Morgan base case scenario sees U.S. CPI moving into 5% as Israel-Iran clashes continue.