We kept urging quite often the rosy opportunities for bears when spot FX of EURUSD was at 1.1379, we could now see all chances of retesting 1.0807 levels as the delta risk reversal for 1m contracts have shown bearish signals back again and on long term perspectives also (1m-3m) put contracts are also on higher demand.

Please have a look at ATM vols and risk reversal nutshell from last week to the current situations. EURUSD still maintains the highest place for implied volatility of 1W at the money contracts among G7 currency space, almost nearing 12%, which is undoubtedly raising higher that is favorable for those look for option writings.

However, as a reminder, this higher IV represents how much movement today's FX market expects from EURUSD during US sessions and the life span of the option. In that respect, an option buyer is partially buying the market's expectations for this pair.

We know that the options with a higher IV cost more, intuitively due to the higher likelihood of the market 'swinging' in your favour. If IV increases and you are holding an option, this is good. You should also note short-dated options are less sensitive to IV, while long-dated are more sensitive.

More importantly, the contracts of this pair for 3m-1y expiries show drastic increase in negative sentiments. So, from this computation what we could interpret is that EUR may eye on minor gains in short run but any given point in time dollar's appreciation as quite certain event on improving macro numbers in U.S and accordingly a Fed's rate decision.

Comparing the ATM vols with risk reversals adding negative sentiments, we arrive with a notion that call writers will have competitive advantage, as a result hedging activities using ATM calls on short side would not only reduce the cost of hedging but also gives leveraging effects to the speculators.