EUR/USD: Time to take profits and resent long on dips in 2021 – CitiBank

Analysts at Citibank forecast the EUR/USD pair will trade at 1.19 in a three-month perspective and at 1.23 in six to twelve months. In the short-term they see that the sentiment around the euro is likely to become more cautious at current high levels ahead of the December 10 European Central Bank meeting where a policy recalibration is likely.

Key Quotes:

“At a time where US real yields are rising more than Bund yields, this could lead to investors taking profits on existing longs, keeping spot moves locked in the narrow 1.16-1.20 range held since summer. However, a Biden presidency and loose Fed likely keeps the USD weak vs its major trading partners. We expect the global growth backdrop to materially improve next year and experience less trade friction, EUR positive.”

“EURUSD trades past 1.2111 which is a horizontal resistance level from the September 2020 high. Above here, lies 1.2150 resistance, which is the target from a double bottom that is already completed and a close above that would push EURUSD higher towards 1.2555, the high from February 2018. And the support may find at 1.1802 (100dMA) and 1.1911 (20dMA).”

“It is time now to take profits now to year-end and reset longs on dips in 2021. We see the medium target at 1.2500+ in 2021 and there are plenty of reasons (including extended USD weakness) to think this target is very attainable.”