(Bloomberg) -- The euro halted a decline on Tuesday to avoid its first two-day drop this month, as options traders wagered the selloff will get reversed.
They’re net bullish all the way out to six months from now versus the dollar, taking heart from European Central Bank President Mario Draghi failing to talk down his currency in public comments on Sept. 7, and from futures indicating the most aggressive long wagering since 2011.
The biggest change is perhaps that options dealers are anticipating calmer seas, according to pricing data compiled by Bloomberg. Looking out just one week, they’re pricing contracts with a volatility of about 8 or less versus the dollar, compared with 10 one week ago. The bias remains in favor of calls.
Buoying the euro during the past week was the most recent report from the U.S. Commodity Futures Trading Commission. That showed net long positions in euro-dollar made by hedge funds and other large speculators climbed to a six-year high in the week through Sept. 5.
The euro rose every day last week, beating the performance of two benchmarks that are highly correlated with it -- the Standard & Poor’s 500 Index and copper futures.