EUR/USD risk reversals: Bearish bias strongest since Feb. 23

• Risk reversals continue to slide, indicating increased demand for the EUR puts.
• The EUR/USD chart shows oversold readings.

The EUR/USD one month 25 delta risk reversals (EUR1MRR) fell to -0.70 - the lowest level since Feb. 23, signaling a rising implied volatility premium for the EUR puts (bearish bets).

The drop in the risk reversals indicates investors expect a deeper drop in the EUR/USD.

The common currency fell to a new 2018 year low of 1.1838 on Tuesday and looks set to extend losses further to 1.1790 (76.4 percent Fibonacci retracement of Nov-Feb rally), courtesy of the widening economic gap between the Eurozone and the US and the rising US-German bond yield spread.

However, the RSI in the EUR/USD daily chart shows oversold conditions. So, a minor corrective rally could be in the offing.

EUR1MRR