A month ago, technical analysis at Citi initiated a call for EUR/USD longs with an initial target of 1.3711 (and a possible target of 1.48). The high today was 1.3704 so they’ve almost hit it.
Interestingly, another department at Citi is out with a different call. Strategists Marinov and Englander say the outlook for EUR/USD could turn ‘decidedly’ negative ‘before long’ unless Europena economic data improves or the US flounders. They see the pair continuing to 1.40 on “reserve diversification away from USD and delayed Fed taper weigh on USD and support EUR” but said that could prove to be a great spot to sell, especially if the ECB launches another LTRO early next year.
My sense is that they’re overthinking it. Reserve diversification isn’t something that happens overnight or something you can possibly time within the next 300-pip move.
