USD/INR risk reversals have nearly shed dollar-bullish bias

USD/INR one-month 25 delta risk reversals are closing to being neutral for the first time in three months. 

The gauge is currently trading at 0.025. A positive number indicates that demand for USD calls (INR puts) is still higher than that for USD puts (INR calls). 

That said, risk reversals have pulled back sharply from highs above 0.46 seen on Feb. 27, meaning the demand for USD calls (INR puts) has dropped significantly in the last two weeks. 

Further, risk reversals are within a touching distance from zero -  a neutral level. Hence, it seems safe to say that risk reversals are no longer skewed in favor of the US dollar. 

It is also worth noting that risk reversals were last seen below zero (USD bearish) in the first half of 2017. So, a drop to or below zero could be considered a sign of dollar-bearish sentiment reaching extremes. 

Risk reversals