EUR/USD could reach 1.25 by year end – CitiBank

Analysts at Citibank see the EUR/USD pair with a positive bias ahead of year-end from a technical perspective. On a fundamental view, they expect the global growth backdrop to materially improve next year and experience less trade friction, and the is positive for the euro. 

Key Quotes:

“For now to year-end, with risk positives /negatives fairly matched and likely priced in, it will be positioning and yearend activity that likely drives DXY downward momentum fades, which may also limit EUR’s performance.”

“At a time where US real yields are rising more than Bund yields, this could lead to investors taking profits on existing longs, keeping spot moves locked in the narrow 1.16-1.20 range held since summer. However, a Biden presidency and loose Fed likely keeps the USD weak vs its major trading partners. We expect the global growth backdrop to materially improve 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 a move towards 1.2375 (measured move) by year end and possibly and extension towards 1.25. Lastly, if we close the year above 1.1570, we will have a bullish outside year on EURUSD.”