Contrary to typical risk-off behavior, a financial shock originating in the US would likely be positive for the EUR/USD exchange rate. This is because it creates more room for the US Federal Reserve to reprice its policy downwards and can trigger repatriation flows out of US equities.

J.P. Morgan maintains a constructive stance on the Eurodollar due to its asymmetric response to Fed pricing. The currency strengthens more when the Fed's terminal rate is priced lower but shows stickiness when it's priced higher, creating a favorable risk-reward profile for bullish positions despite lowered upside targets.

With the European Central Bank firmly on hold, a low-volatility regime is expected to persist. However, the options market is not fully pricing in the potential for directional curve movements, such as steepening or flattening. This creates opportunities to express curve views through options where the risk is undervalued.

Contrary to the belief that US strength harms the Euro, historical data shows the EUR/USD pair performs best when growth outlooks for *both* regions are being upgraded. This is because the Euro is fundamentally a pro-cyclical 'growth currency,' benefiting from a global risk-on environment even when the US also thrives.

Despite negative political headlines, the Euro/Dollar spot rate has fallen below its fair value of 1.17, as determined by real yield differentials. This marks a significant shift, suggesting the risk/reward is once again becoming attractive for medium-term bulls on the currency.

While J.P. Morgan maintains a bullish bias on the Euro, it's not a high-conviction trade for capturing global growth. Its primary value is offering asymmetric upside with bounded downside (around 1.15). The currency is positioned for "explosive moves" if US data or policy falters, making it more of a strategic hedge.

Despite a packed calendar of central bank decisions and key data releases, broad FX volatility is hovering near five-year lows. This suggests investors are underpricing potential market moves, and current options pricing for events like U.S. payrolls may be insufficient to cover a significant data surprise.

Contrary to the historical norm where volatility rises with a strengthening dollar (risk-off), the market is now experiencing higher volatility as the dollar falls. This unusual 'dollar down, vol up' dynamic suggests a pro-cyclical market backdrop and has major ramifications for how FX options and risk reversals are priced.

In a volatile, rapidly rising market, an 'options crawl' strategy allows investors to stay in the trade while managing risk. It involves selling expensive, high-strike calls that speculators are buying and using the proceeds to finance calls closer to the current price, thus maintaining directional exposure with a defined risk profile.