For example, Draghi has stated that the ECB is ready to add as much as 1 trillion euros to the institution’s balance sheets, purchasing everything except gold, which means the central bank will be dumping euros to acquire assets and devaluing the currency.
Now, options traders are paying more than any time in over a year to hedge against further euro declines. The premium for one-year options to sell the euro over those to purchase it is 155 basis points and briefly widened to 159.5 basis points on Dec. 18, the most since Oct. 2013.
“Looking into 2015, I think we will move towards a level that does reflect the situation in the economy and monetary policy,” Simon Derrick, chief currency strategist at Bank of New York Mellon Corp., said in the article. “$1.10 seems about right for next year. The opening few weeks of the year will be a time to be cautious, but on the whole, do I think the euro goes down? Yes, absolutely.”
ProShares Short Euro
For more information on the euro currency, visit our euro category.
Max Chen contributed to this article.