Bearish sentiment towards the US dollar is brewing, with the options market betting on devaluation risks

(1) The U.S. Treasury's buyback operations of long-term government bonds not only suppress yields, but are also quietly reshaping the pricing logic of dollar risk in the foreign exchange options market. As the interest rate differential—the main driver of dollar strength—is weakened, traders are actively positioning for further dollar depreciation. (2) This change is particularly evident in foreign exchange options risk reversal contracts: for the first time since February, the six-month risk reversal for EUR/USD has turned in favor of put options. The put option premiums for GBP/USD, CHF/USD, and AUD/USD have also risen to the widest levels relative to call options in recent months, indicating this is a repricing across the entire G10 currency system, not just euro-related trades. (3) Notably, although implied volatility in options remains at long-term lows—since the spot market has not seen swings strong enough to drive volatility higher—skew indicators are already signaling potential changes. Traders are accumulating dollar short positions through direct put option purchases, spread strategies, and other downside dollar structures. (4) This imbalance could trigger a chain reaction. Faced with persistent demand for put options, market makers, if needing further hedging against dollar downside risk, may be forced to sell dollars in the spot market, thereby amplifying the dollar's weakening. (5) This creates an asymmetric risk pattern: if the dollar's decline accelerates, the current skew structure may first trigger a sharp rebound in implied volatility from its lows, and currency pairs whose risk reversals have shifted towards dollar puts would face the greatest volatility repricing pressures.