FxWirePro: EUR/USD PRBS to keep hedging tight

The dollar remained on the back foot from last weeks' US employment rates tempered expectations for higher interest rates later this year. The euro found some support after Greece requested a new three-year bailout from its euro zone creditors and pledged some economic overhauls on Wednesday. Whether Euro leaders accept this request? It depends on Greece's pension cuts, tax increases and other austerity measures after five months of negotiations.

But euro inched up to one-week highs against the U.S. dollar on Thursday on the hopes of new three-year bailout requests and as the minutes of the Federal Reserve's latest meeting pressure the greenback lower.

Overall, we expect euro to experience weakness on back of the present negative fundamentals and technicals suggest long term trend being bearish bias. Hedgers are advised to arrest potential downside risks through reverse ratio spreads using At-The-Money put options.

So, buying 2 lots of ATM 0.5 delta puts would mean on each lot an equivalent outrights to a short (sell) 50,000 EUR/USD position in the underlying FX spot and simultaneously short 1 lot of (0.5%) In-The-Money Put option with positive theta of the same maturity.