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2025 Market Outlook: Key January Events to Watch 
We are trading EURUSD tactically given the Fed outlook and own EURJPY as the best expression of global rates rethink that the Bank of Japan would be the last to embrace. The Fed has been noncommittal while the ECB continues to guide markets towards QE taper. Initiate long EURUSD to neutralize implicit EUR short via DXY. EURUSD volatility remains depressed, but the euro appreciation that we expect is likely to be turbulent. In the process, the skew could flip in favor of EUR calls for the first time since 2009.
The next semester should see the euro break above its range of the last few years, and interest rate volatility fueled by central banks exiting accommodation would be channeled towards FX. Buy 6m EURUSD calls conditioned by higher volatility.
Reflation in Europe and the US should involve a steepening of the volatility term structure, making long positions in EURUSD forward volatility very attractive.
EA strong capital surplus and the ECB withdrawing from QE are strong forces that may propel the euro much higher than our 2018 forecasts. Buy EURUSD 2y OTM calls financed by selling the bottom of the range via expensive puts.
Towards the top of the EURUSD range: Stay long in EURUSD via 6m call strike 1.15, European KI on the realized volatility at 9% Indicative offer: 0.60% (vanilla: 1.61%, volatility swap: 7.6%, spot ref: 1.14).
Reflation set to boost forward vol: Go long EURUSD forward volatility agreement 6m6m Indicative offer: 7.8.
The game-changing scenario: 1.30 in 2018. Buy EURUSD 2y call strike 1.27, Sell 2y put strike 1.06 Indicative offer: 0.33% (Spot ref: 1.14).
