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SocGen Recommend Long EUR/USD Via Options

EUR
  • SocGen recommend buying EUR/USD calls into Spring
  • Their trade recommendation envisages a friendly risk backdrop, lower energy prices and hopefully a de-escalation of the war in Ukraine allowing markets to focus more on ECB tightening.
  • Fed projections show inflation falling much faster in the US relative to the ECB’s hawkish estimates. So, the perception remains that the ECB still has a significant amount of rate hikes to deliver, with its hiking cycle likely to last longer than the Fed’s.
  • They express the view via options and recommend taking advantage of EUR/USD vol levels still clearly below 10.
  • The products used are:
  1. EUR/USD 4m call strikes at 1.0750, knock-out 1.122.
  2. 4m butterfly call strikes 1.08/1.10/1.123.
  3. Buy EUR/USD 4m seagull strikes 1.02/1.08/1.10

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