Citibank analysts see the EUR / USD pair with a positive bias ahead of year end from a technical perspective. Fundamentally, they expect the global growth backdrop to improve significantly next year and experience less trade friction, which is good for the euro.
Key quotes:
“For now until the end of the year, with fairly equivalent positive / negative risks and probably taken into account, it will be the positioning and the end-of-year activity that will probably lead to a decrease in momentum of DXY, which may also limit the performance of the EUR.
“At a time when US real yields rise more than Bund yields, this could lead investors to take profits on existing long positions, keeping spot moves stuck in the narrow 1.16 to 1 range,” 20 held since the summer. However, a Biden presidency and a loose Fed are likely keeping the dollar weak relative to its major trading partners. We expect the global growth backdrop to improve significantly next year and experience less trade friction, EUR positive. “
“EURUSD closed above a good horizontal resistance level at 1.2178 and is trading at a new trend high. We expect at least one move towards 1.2375 (measured move) by the end of the year and possibly an extension towards 1.25. Finally, if we close the year above 1.1570, we will have a bullish outside year on EURUSD. “
