EUR/USD - Risk reversals at 4-month high, 1.20 soon?

• EUR/USD risk reversals validate bullish technical breakout

EUR/USD closed above 1.18 levels for the first time since Sept. 22. Having defended the key descending trend line support last week, the pair moves higher in a move that qualifies as a bullish break. The charts indicate scope for a rally to 1.20 (psychological level) and 1.2092 (yearly high).

Risk reversals at 4-month high

The one-month 25 delta risk reversals gauge rose to a 4-month high of 0.45 on Friday, suggesting increased demand for the EUR calls. It adds credence to the bullish technical breakout on the charts and could yield a move to 1.20 or 1.2092.