EUR/USD: EZ current account, Chinese easing and fading US outperformance may underpin the euro - CitiBank

Analysts at Citibank, see potential in the euro to rise against the US dollar over the medium term. They warn that increasing volatility across global markets may restrain EUR.

Key Quotes: 

“Investors are equally worried about the broader aggregate Eurozone data momentum and potential for recession risks. But an extension of the TLTRO program in April is Citi’s base case, which may certainly help avoid an unwanted tightening in EA financial conditions. Eurozone current account surpluses, Chinese easing and fading US growth outperformance may underpin EUR in the medium and long term.”

“The Fed may not hike rates until Jun and Sep and may announce to end balance reduction in Jul at the earliest, which may undermine USD and underpin EUR.”

“Since the RSI dropped to oversold territory, EUR/USD downside may be limited at 1.1023 and the pair may consolidate between 1.1023-1.1281, with next resistance at 1.1448.”