Citi: EUR loses to USD
After another unsuccessful attempt to break above 1.10, EUR/USD has returned to the middle of the last days range - 1.0880. Bids in this area still keep the pair from further decrease and currency strategists of Citi believe that breaking the lower boundary looks very probable and recommend to trade using bearish strategy. Bank notes that the general technical picture and the prevailing trend remains negative for the euro, and news from the Eurozone does not give reason for optimism.
The bank's strategists note that joint steps to overcome the consequences of the pandemic are difficult for European countries. Although the French-German initiative to create a 540 billion fund is a significant event in terms of eliminating fears about escalation of the situation within the block and its collapse, it does not give reason for optimism about the prospects of European assets and the euro. Citi notes that investors who have seen the magnitude of the disaster now tend to view the stimulus measures of central banks and governments not in the context of negative monetary effect on the currency or rising debt burden, but in the context of prospects for a faster recovery in economic growth, and in this regard the euro is losing to the US dollar.
Citi believes that eventually EUR/USD will shift from the current range of 1.07-1.10 to the range between 1.03 and 1.05.