Currencies: Pressure on euro/yen rate

The euro/dollar rate is hitting new lows on an all-too-frequent basis at present. While much of the talk is of intervention or non-intervention by the European Central Bank, there is also the issue of whether there is any signal as to where the bottom might be. One sign that the euro is potentially bottoming out came with the extremes reached in the FX options market.

In early September, the one-month risk-reversal ratio had risen to such a level that the market was trading in favour of the