EUR/JPY risk reversals hit one-month high

• Risk reversals show a drop in the value of EUR puts (or JPY calls). 

The EUR/JPY one-month 25 delta risk reversals are being paid at 1.60 EUR puts vs. 2.9 EUR puts on Feb. 13. The decline in the implied volatility premium of EUR puts indicates a drop in demand for EUR puts (bearish bets). It also means the investors do not expect a deeper sell-off in the EUR/JPY. 

The EUR/JPY spot created a bullish outside day candle yesterday and rose above the 200-day moving average (MA) of 131.35 in Asia, signaling the sell-off in the pair from 137.51 (Feb. 2 high) may have found a temporary low of 129.35.