Currency Hedging Strategy for Alpha Technologies

Alpha Technologies is a U.S.-based firm that generates significant revenue in the eurozone. With current market volatility and the potential for a European recession, management is concerned about the impact of a declining euro on their revenues. Currently, the exchange rate is 1.10 USD/EUR, but management predicts a possible decline to 1.05 USD/EUR over the next year. To hedge their euro exposure, the treasurer of Alpha Technologies considers using a currency futures contract that is quoted at 1.08 USD/EUR with a contract size of €100,000. Given this information, determine which hedging strategy is most appropriate for Alpha Technologies to minimize their foreign exchange exposure.