Hedging dollar dividends back to euro

BACKGROUND: A European holding company is seeking ways to protect the value of the dividends it receives from a US-based subsidiary. The dividends are paid semi-annually in USD. The holding company is concerned about another round of USD weakness and wishes to protect the next dividend payments at current levels. The client believes the EUR will continue to appreciate over the next two quarters, but may then retrace towards the end of the year. On the back of this view, the company also wants to

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