💶⚠️Euro Skewness Holding Bullish Bias: Cable FX Macro

• The FOMC concluded its September 2025 meeting on Wednesday, September 17, 2025, with a widely anticipated 25 basis point (bps) rate cut, lowering the federal funds rate to a target range of 4.00%–4.25%. The updated dot plot signaled a more dovish outlook, with a majority of participants projecting two additional cuts in 2025 (totaling 75 bps for the year) and further easing to 3.6% by year-end 2026.

• The dollar has outperformed since the decision, most major currencies are posting losses over the last five days. This counterintuitive strength post-rate cut reflects a "hawkish cut" interpretation: markets priced in fewer aggressive future easings than expected, supported by robust US data (e.g., hot September CPI previews) and global risk-off flows. However, analysts note the rally is losing steam, with bearish structure intact for a potential reversal.

• Euro skewness, a measure of traders' sentiment in the options market, is holding an EUR/USD bullish bias despite the dollar's recent recovery. The pair has been traders' preferred expression to the dollar downside in recent months. The 1y tenor is currently seen at around 70bps richer for calls over puts. The EUR/USD structure has been euro bullish since April.