In early 2008, the euro was trading near $1.60, and the U.S. dollar was in the gutter. Nobody, and I mean nobody, gave the dollar a chance at recovering against the euro (weakness in the euro). Athletes, actors, and other celebrities were demanding to be paid salaries in the euro rather than the greenback. You might recall a similar phenomenon last year when there were requests to be paid in ... bitcoin.
Yet, to the surprise of some A-listers, in July 2008, the euro started to weaken against the dollar. It quickly collapsed from a peak of $1.60 to $1.23 in three months. Since then, we have seen some volatile rallies, but $1.60 is a distant memory. Over the last decade, the euro has spent most of its time between $1.20 and $1.05. The current selloff is unusual in that it has dipped below $1.03, but in the big picture, a $1.00 euro is probably as unsustainable as the $1.60 euro was. That said, with the world looking for par and the algo bots shooting for it, we could see a temporary probe lower to crush the hopes of the remaining bulls before things turn the corner. If so, that might mean 98 cents to 97 cents vs. the dollar. In any case, once the narrative shifts, the rally will be fierce. In 2017, the euro dipped slightly under $1.05 only to trade above $1.25 in less than a year.
Given the downside risk and option pricing, we wouldn't suggest swinging for the fence. But it seems to make sense to buy cheap December call options. They have 150 days to expiration, so there won't be a lot of time value erosion in the short-run (but will lose value quickly if the euro drops sharply from here). Nevertheless, sideways trade shouldn't do too much damage to call option values until later down the road. Yet, if the relentless selling turns into a short squeeze, the options that are cheap today will become immediately expensive as the bears look to hedge upside risk and the bulls look to add risk with a fear of missing out mentality.
For educational purposes, you can consider following the December euro currency $1.10 call option. This is written against the December euro futures contract and has 150 days to expiration. At the moment, the cost, and total risk, is about 34 ticks or $425. If the euro turns the corner, this option might react violently to the change in upside volatility. For perspective, this option was worth 155 points or just under $2,000 three weeks ago.
If we are wrong and the euro continues to decline, as mentioned, a sharp probe below $1.00 is possible, it might make sense to get more aggressive. For now, being long December call options with plenty of time and low/limited risk seems like a clever idea.