Currency Hedging Techniques for Company A

Company A, a U.S.-based corporation, is looking to expand its operations into Europe and is concerned about currency fluctuations that could affect its profitability. The company expects to receive payments in euros (EUR) for its products sold in Europe.

To mitigate the financial risk from currency fluctuations, Company A is considering implementing a currency hedging strategy. Describe two common hedging techniques that Company A can use to protect against adverse movements in the euro against the U.S. dollar (USD) and explain how these techniques work.