Implied Volatility in Euro Vs Dollar Low Compared to Past Crises -- Market Talk

Dow Jones03-23

1059 GMT - The cost of insuring against potential price swings in the euro versus the dollar, or implied volatility, is surprisingly low given the intensifying Middle East conflict, Commerzbank's Thu Lan Nguyen says in a note. Options-market pricing shows three-month implied volatility for the exchange rate is 7.8%, LSEG data show. This compares to last year's high of 11.1% when U.S. tariffs were imposed, the 2022 high of 12.9% when Russia invaded Ukraine, and the 2020 pandemic high of 12.1%. That's possibly because the market expects the European Central Bank to respond more quickly to an inflation shock this time and the Federal Reserve to be more cautious given a weak labor market and political pressure to cut rates, Nguyen says. (renae.dyer@wsj.com)

(END) Dow Jones Newswires

March 23, 2026 06:59 ET (10:59 GMT)

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That's possibly because the market expects the European Central Bank to respond more quickly to an inflation shock this time and the Federal Reserve to be more cautious given a weak labor market and political pressure to cut rates, Nguyen says. 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Options-market pricing shows three-month implied volatility for the exchange rate is 7.8%, LSEG data show. This compares to last year's high of 11.1% when U.S. tariffs were imposed, the 2022 high of 12.9% when Russia invaded Ukraine, and the 2020 pandemic high of 12.1%. That's possibly because the market expects the European Central Bank to respond more quickly to an inflation shock this time and the Federal Reserve to be more cautious given a weak labor market and political pressure to cut rates, Nguyen says. 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That's possibly because the market expects the European Central Bank to respond more quickly to an inflation shock this time and the Federal Reserve to be more cautious given a weak labor market and political pressure to cut rates, Nguyen says. 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