Question

Assume the current Euro-Dollar exchange rate is 0.9 EUR/USD. Based on your analysis you expect the Euro to depreciate. What is your trading strategy? Discuss. How much would you invest in this strategy?

Answer 1

My trading strategy will be to go long on United States dollar in futures or we can also short the the European Euros in future markets.

This depreciation of European euros can also be played through currency options in which I will be trying to take the put option of the European currency and I can also take the call option of American Dollars.

This strategy is mostly related to maximisation of rate of return through depreciation of European Euros and appreciation of American Dollars in the futures so I will be trying to play with the depreciation of European Euros and appreciation of American Dollars.