Options traders are increasingly bullish on the euro against the British pound, anticipating a stronger rebound following a steep decline. The euro has experienced a historically sharp selloff, but traders now believe the single currency has factored in too much risk, particularly surrounding France.
Euro-sterling risk reversals, a key indicator of market sentiment, have reached their most euro-bullish levels since early October. This shift suggests growing demand for options that benefit from an upward move in the euro's value.
The market's positioning reflects a bet that the euro has bottomed out and is poised for further gains. Traders are positioning for a rebound, signaling confidence in the single currency's resilience despite recent volatility.