Rising risks in France prompt hedge funds to increase bets on a weaker euro

⑴ Political and fiscal risks in France have intensified, prompting hedge funds to buy large amounts of put options; they will profit if the euro depreciates against the US dollar.⑵ On Wednesday, among EUR/USD options with a notional principal of 100 million euros or more, the trading volume of put options was more than twice that of call options.⑶ Market demand for downside EUR/USD options continues to rise, with maturities extending from the short end all the way to summer 2027.⑷ This maturity covers next year's European election cycle, indicating that investors are positioning in advance for potential volatility.⑸ Overall, French fiscal and political uncertainty is becoming an important short-term pressure factor for the euro. Going forward, it will be crucial to monitor changes in option market sentiment as well as the progress of European political events.