Euro Falls and Options Traders Have a Told-You-So Moment on ECB

(Bloomberg) --

Option traders were right to expect the least exciting European Central Bank policy meeting in more than five years.

Even though the euro declined as much as 0.3%, it’s still languishing within a tight range that has held since early December. One-month implied volatility, a measure of swings in the currency, slipped to an all-time low.

President Christine Lagarde declined to reveal her preference on inflation strategy and thus remained neutral over the course of monetary policy. She said euro-area governments need to “substantially step up” structural reforms, which may be a signal that the ECB won’t alter its policy mix anytime soon. That lowered expectations for currency volatility.

The euro retreated 0.2% as of 2:36 p.m. in London to $1.1070.

• NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

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