Investing.com – The European Central Financial institution holds its newest policy-setting assembly later this week, and Citigroup advises promoting any rallies within the euro round this key occasion.
Markets are pricing in round 49 foundation factors of easing over the remaining two ECB conferences this 12 months, which might restrict dovish repricing round Thursday’s occasion, based on analysts at Citi, in a word dated Oct. 15.
“We see scope for a tactical bounce in EUR round this Thursday’s ECB assembly, which we like fading into November as US election danger premium materializes,” Citi stated.
That stated, “we like fading any subsequent rallies in EUR as we strategy November and US election danger premium will get higher priced.”
There’s some proof of this unfolding, the financial institution added, as EUR seems to be undervalued on its short-term honest worth mannequin and as Citi’s FX Positioning knowledge suggests including to EUR shorts.
“However our broader FX election basket nonetheless screens as undervalued relative to Trump betting markets, and we stay quick EURUSD in each spot and choices,” says Citi. “We might look to promote any retest of the 1.10 double high neckline — any break above there dangers a transfer in direction of our adjusted cease of 1.1050, but when that resistance holds, we’ve increased conviction of a transfer in direction of our (and the double high) goal of 1.08, with potential overshoot in direction of 1.07.”
At 05:25 ET (09:25 GMT), traded largely flat at 1.0892, virtually 2% decrease during the last month.