Using a long straddle for EUR-USD participation
REAL-LIFE PROBLEMS, INNOVATIVE SOLUTIONS
Background: So far, EUR-USD has been hovering in a broad range between 1.19 and 1.26 for roughly four and a half months. Events from both sides of the Atlantic contributed to this picture. Following the rejections of the EU constitution by France and the Netherlands, we saw a flare up of speculation on ECB rate cuts, while market participants simultaneously placed strong bets on further Fed rate hikes. However, in the meantime, dollar sentiment became overcast by surging oil prices and hurricane
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