Rabobank strategist Michael Every describes a complex setting for the euro, shaped by the war in Ukraine, EU funding plans, and political splits within Europe. He also points to wider tension between the US and Europe on security and foreign policy.
He says Ukraine is making battlefield gains and suggests victory is becoming more plausible, aided by drone strikes. The EU is also preparing for delays to US weapons shipments because of the Iran war.
The Times reports the UK is not seizing Russian shadow fleet tankers in its waters, citing the cost of berthing and maintaining them. France and Germany are reported to be weighing an EU accession approach that offers Ukraine “symbolic” benefits, without access to the EU common budget or voting rights.
The Wall Street Journal reports that many German firms are trying to become defence suppliers as the country speeds up rearmament. The piece states it was made with the help of an AI tool and reviewed by an editor.
The potential for a Ukrainian victory and Germany’s industrial pivot towards defense suggests a bullish outlook for the sector. We should consider buying call options on major European defense contractors, as their order books are swelling; Rheinmetall AG’s backlog, for instance, reportedly surpassed €50 billion in the first quarter of 2026. This rearmament trend points to sustained growth regardless of near-term battlefield outcomes.
However, delays in US support and internal EU divisions over Ukraine’s future introduce significant uncertainty. To protect our portfolios, buying VSTOXX futures or call options is a prudent hedge, as European market volatility has already climbed 15% in the past month to over 22. Looking back from our 2025 perspective, we remember how the VIX index surged over 35 during the initial 2022 conflict, showing how quickly geopolitical stress can impact markets.
The Euro is caught between these conflicting forces, making a clear directional bet on EUR/USD risky. A long straddle options strategy on the Euro could be effective, profiting from a large price swing in either direction as these tensions play out. The European Central Bank’s latest minutes from early April 2026 showed a divided council on future policy, reinforcing the potential for sharp, unpredictable currency moves.
