8 Dec 2014
EUR downside, but with equity risks – Citi
FXStreet (Barcelona) - The Research Team at Citi Group, anticipate EUR/USD to head towards 1.12-1.15 levels in Q4 2015, and note that aggressive Fed action can take the pair lower faster.
Key Quotes
“We see EUR as 1/3 to 1/2 of the way through a long-term weakening cycle and that stabilization of the currency isn’t likely until sometime after 2016. The key theme for 2015 is to avoid getting flattened by an occasional correction. We see 1.15 or a bit lower by end-2015, but think a digital or put spread is better way to approach than outright spot. EUR could move further and faster if QE is introduced in January or Fed rate expectations firm.”
“Currencies often trade in multi-year cycles and EUR is embedded in a downtrend. In Europe’s case, divergence in economic performance, capital flows, monetary policy, fiscal policy and inflation all settle into the backdrop for a weaker EUR.”
“As a broad brush expectation, we see EURUSD at 1.12-1.15 for Q4 2015, although more aggressive than expected Fed action could take it lower faster. The key is to avoid pullbacks that temporarily mask the underlying trend.”
Key Quotes
“We see EUR as 1/3 to 1/2 of the way through a long-term weakening cycle and that stabilization of the currency isn’t likely until sometime after 2016. The key theme for 2015 is to avoid getting flattened by an occasional correction. We see 1.15 or a bit lower by end-2015, but think a digital or put spread is better way to approach than outright spot. EUR could move further and faster if QE is introduced in January or Fed rate expectations firm.”
“Currencies often trade in multi-year cycles and EUR is embedded in a downtrend. In Europe’s case, divergence in economic performance, capital flows, monetary policy, fiscal policy and inflation all settle into the backdrop for a weaker EUR.”
“As a broad brush expectation, we see EURUSD at 1.12-1.15 for Q4 2015, although more aggressive than expected Fed action could take it lower faster. The key is to avoid pullbacks that temporarily mask the underlying trend.”