BUZZ-COMMENT-Why the USD should remain weak - for now

Feb 17 (Reuters) - The USD has declined to a two-month low over the last week and there's good reason to think it can stay on the back foot, at least for now.

Friday's weaker than expected U.S. retail sales certainly helped to question the recent U.S. exceptionalism sentiment, especially after some of the recent CPI components indicated a weaker PCE data print, which is the Fed's preferred inflation gauge.

Trade tariffs are now being seen as more of a negotiating tactic and likely to be watered down versions of the initial threats that were fuelling demand for the USD. There are also hopes of a ceasefire in Ukraine which is helping broader risk sentiment and weighing the USD.

Price action in forward-looking FX options shows a sharp fall in FX volatility risk premiums - which can be likened to an FX market fear gauge. Option premiums for USD calls over puts have also been reduced over recent sessions. USD calls give holders the right to buy the USD, while USD puts offer the right to sell it.

The EUR/USD FX options market demonstrates the recent broader based price action in FX options nL2N3P80A3

For more click on FXBUZ