Bets on the euro rising to 1.20 US dollars are making a comeback due to diverging interest rate paths between Europe and the United States.

As investors bet on the euro benefiting from diverging interest rate paths between the Federal Reserve and the European Central Bank, it is rising towards the $1.20 level. The euro against the dollar rose by 0.1% at one point in the session, reaching a high of 1.1780 since July 24, but then gave back some of the gains; the European Central Bank will announce interest rate decisions on Thursday. The options market is also consolidating the euro's upward momentum, with the so-called risk reversal index showing increased bullish sentiment across various maturities. Data from the U.S. custodian trust and settlement company shows that since last Friday, one-third of bullish bets are targeting the euro breaking through $1.20.