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EUR/USD short-dated vols remain well....>

EURO-DOLLAR
EURO-DOLLAR: EUR/USD short-dated vols remain well bid with 1w implied volatility
touching the highest level since May last year and the political risk that
surrounded the French general elections. EURUSD 1w risk reversals are also
dropping in tandem.
While short-dated vols have been rising, the opposite is true for 1m+ vols which
continue to decline in almost all the major pairs. Investors are clearly
becoming nervy over a weekend of risk including the Italian elections and the
German SPD member vote, both of which could throw up roadblocks to the current
political systems in Rome and Berlin.
This raises the risk of a flight from EUR risk heading into the close of the
week and that may be reflected in the EUR/USD rate so far today, which has
dropped below $1.22 for the first time since early January.

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