💶🔺Euro Risk Reversals Stand Most Bullish Since Early 2022: Cable FX Macro

• Noting EUR/USD option markets skewed towards euro calls into the 1m tenor, risk reversals have retraced since yesterday's market reaction to CPI data but remain above par

• Topside interest in euro-dollar has not favoured calls over puts since early 2022. The chart below shows the 1m tenor skewed towards puts since the invasion of Ukraine

• 1m riskies favoured dollar calls by 150bps back in June, when French political and fiscal risks were flagged. However, softer than expected U.S. data has taken traders to price a more aggressive Fed easing cycle. Some of these bets are pared as we speak