Citi: reasons to short EUR/USD
Citibank remains skeptical on further EUR/USD rebound despite the current upward move. They see two major reasons to stay short on the euro:
1. Despite Fed’s cautiousness last night, the US growth story is still the strongest in G4. The US cyclical leadership will continue to support the dollar. It would take a significant deterioration in US data to see Fed actually backing away from QE tapering and exit.
2. The ECB will continue to lean against potential premature tightening in euro zone. More detailed forward guidance, another main refinancing rate cut and unconventional policies like LTRO should keep both euro rates and EUR under pressure.