Investors may have left themselves too exposed to the risk of the euro falling, having slashed bets against the currency since the European Central Bank promised to stop it breaking apart.
ECB President Mario Draghi's pledge in late July to do whatever it takes to save the euro, followed in September by a detailed plan to buy the bonds of indebted euro zone countries, encouraged investors to pile back into the currency as the fear of the bloc collapsing diminished.
But some analysts and longer-term investors say it may be time to snap up protection against the euro falling, which has become cheap, arguing many threats to the currency remain.
Implied volatilities in euro/dollar -- a measure of expected price swings -- are at levels not seen since before Lehman Brothers collapsed in 2008. Risk reversals show the premium charged to buy bets on a weaker euro hit a two-year low last week.
Volatility often falls when the euro is rising, leading some analysts to see it as a sign of investor complacency.
Indeed, there are still risks stemming from a weak euro zone economy, a possible slowdown in Asia, the U.S. presidential election and the looming U.S. "fiscal cliff" of potential tax increases and spending cuts, they say.
"There is a disconnect between volatility and what is going on in the real world," said Nick Bullman, managing partner at consultants CheckRisk, which advises on risk management on over $35 billion of assets for pension companies, hedge funds and fund managers.
He said investors should "take advantage of volatility in currencies being so low", adding it was "very unlikely" it would remain so weak.
Ulrich Leuchtmann, head of currency research at Commerzbank, said volatility at these levels "implies the (euro zone) crisis is over". He has recommended clients buy 12-month options in euro/dollar in anticipation of greater volatility.
But choosing when to move is difficult. Many investors are cautious because if Spain applied for a bailout, this would allow the ECB to buy its bonds and the euro should benefit.
But some analysts, including Leuchtmann, argue the euro, which has risen more than 10 cents since hitting a two-year low of $1.2042 in July, is unlikely to rise much further.
Data from the Commodity Futures Trading Commission shows speculators have sharply reduced net short positions in the euro from near-record levels close to 170,000 in mid-July to just over 53,000 in the week to October 16.
This suggests the euro may have limited further scope to benefit from investors covering short positions in the currency.
Henry Lancaster, senior investment analyst at private bank Coutts, said the euro zone crisis has been marked by cycles of crisis, then response -- such as the ECB bond-buying plan --, then complacency, followed by a further increase in tension.
"We're getting close to a point where sentiment could swing round in the euro ... we could certainly see the euro move back down towards its $1.20 lows for the year."
Valentin Marinov, currency strategist at Citi said that if Spain delayed applying for a bailout, investors may sell Spanish bonds, pushing the euro down and implied volatilities up.
"We are trading at very depressed volatility levels that could provide interesting entry points for long positions if event risk picks up or economic data starts to disappoint again into year-end."
Many investors are wary of betting on euro falls because they have been burnt in the past.
Late in 2011, euro break-up fears prompted a scramble to buy bets on euro falls, causing one-month risk reversals to spike to a record high above 4.0 vols. Many had expected the euro would drop to $1.20, $1.15 or even $1.10 in a year's time.
But in the last year the euro has not fallen below $1.20 and risk reversals are showing only a slight bias for euro weakness.
"Maybe the market will stop betting against euro/dollar because it could prove to be very costly," said Olivier Korber, options strategist at Societe Generale.
He said it was risky to assume the euro would fall when the ECB has pledged to buy peripheral debt.
But Commerzbank's Leuchtmann said investors may have made the mistake of going from one extreme to the other, having grown weary of expecting the euro to slide.
"Many people have been disappointed. They had expected the euro zone crisis would have a catastrophic effect on the euro and they are simply tired of running long volatility positions."
(Editing by Nigel Stephenson)