Everyone expects ECB to increase easing volumes, but for now it seems unlikely that the QE volume has to be increased to € 70, 75 or 80 billion and the deposit rate is lowered by 10, 15 or 20 bps.

Euro Area CPI inflation is expected to have ticked up to 0.2% in November, though we project a dip in the core measure back to 1% from 1.1%. That's far enough below 2% to leave the debate about tomorrow's expected move unchanged.

The Euro got a lift from the contrast between European and US manufacturing PMI data, but while it is holding above USD 1.06, it is hardly impressing.

A break lower to test the year's lows after the ECB meeting and before the FOMC still seems likely. A bounce after the FOMC is still our best guess thereafter.

On the flip side, USD has been desperately waiting for this month, we reckon dollar is most likely to be supported next week after FOMC minutes optimistic readiness of the board to begin the monetary normalization cycle as soon as December.

With fed fund futures already pricing about a 70-80% chance of a hike this year, we would expect a modest upward move in the USD as the market fully prices in December as the lift-off date.

Which in turn prompted hedging activity for currency downside risks, as a result we can understand ATM puts have been costlier where the FX market direction of this is heading towards 1.0595 and 1.0505 technical levels. Currently, it is struggling at 1.0635 levels.

EURUSD's higher IV with negative delta risk reversal can be interpreted as the market reckons the price has downside potential for large movement ahead of FOMC season which is resulting derivatives instruments for downside risks have been overpriced.

But any spikes in this pair in near term can be attributed as shorting opportunity in our back spreads.

We eye on shorting (1%) 1w in the money put (this would match 1w risk reversals) which would lock in certain yields by initial receipts of premiums.

Therefore, 3 lots of 1m ATM -0.50 delta puts are preferred to suit the prevailing losing streaks. So thereby the spread would be executed for net debit and the cost is reduced by short side.