Euro Hits Two-Month Low as Options Traders Bet on Further Weakness

The euro has hit its lowest point in nearly two months against the US dollar as options traders bet on further weakness following the Federal Reserve's interest-rate hike. The common currency weakened by 0.2% to $1.1426, marking a third daily drop.

According to data from the Depository Trust & Clearing Corporation, options exposure has shifted significantly since the Fed decision, with around 60% of total notional positioned for euro weakness. This is a stark contrast to the evenly split positioning following the European Central Bank's latest rate increase.

The shift in market sentiment can be attributed to persistently high energy prices, which are weighing on the euro area's growth outlook. ECB Governing Council member Joachim Nagel has warned that officials may have to raise interest rates to restrain economic growth if elevated energy prices persist.