Euro Falls to Nearly 17-Month Low as Options Bearish Sentiment Hits Over Six-Month High
nashnova research
On the eve of the ECB rate decision, EUR/USD slid to 1.1134 — a roughly 17-month low — with longer-dated options showing the strongest bearish tilt since March 2025. France's fiscal risk is hardening from short-term jitters into a structural repricing.
How far has the euro fallen?
EUR/USD hit 1.1134 at 08:54 London time, down 0.2% on the day, near its lowest level in about 17 months.
The euro is on track for its worst two-month stretch since late 2024.
This means → the move is not a one-day flash; it is a sustained two-month slide driven by structural forces.
What is the options market signaling?
Longer-dated options pricing shows traders are the most bearish on the euro since March 2025.
The "fear-greed indicator" — a gauge of the balance between buying and selling pressure — has stayed bearish for the longest run since January 2025 and ranks as the third-largest cumulative bearish reading in six years.
In plain terms = it is not just that some traders are betting against the euro — the size and duration of that bet are approaching extremes.
Why is France the drag?
French fiscal stress and broader eurozone political risk are the structural drivers behind this leg of euro weakness.
The options term structure is split: one-week risk reversals show near-term bearishness easing, but one-year risk reversals show the downside premium still widening.
This reflects a market that has moved its France worry out of the "panic" column and into medium-to-long-term structural pricing — the kind of pessimism that is harder to reverse.
Can the 1.11 level hold?
ING currency strategist Francesco Pesole says EUR/USD is "not ready to break below 1.11" and does not expect the ECB meeting to trigger a sharp drop.
He warns, however, that technical momentum could add pressure, pushing the euro to a fresh 17-month low.
Traders familiar with the flows say short-dated bearish option structures have recently been unwound, while there is selling interest below 1.11. This means → the most aggressive short-term bears have stepped back, but if 1.11 breaks, sellers are waiting below.
What are the ECB and the Fed each doing?
The ECB is expected to hold rates steady at this meeting, buying time to assess high energy prices' inflation impact and the pace of the economic slowdown.
Markets are pricing in rising odds of future Fed rate hikes, further widening the yield gap in the dollar's favor.
In plain terms = one central bank is sitting still while the other may tighten — capital naturally flows to the higher-yielding currency, so the euro faces pressure not just from its own problems but from a stronger rival.
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