Live Markets: Citi raises euro-dollar forecast, sees slight dollar weakness

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21/08/2026 11:51

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CITI LIFTS EURO-DOLLAR FORECASTS AS DOLLAR HEADWINDS MOUNT
Analysts at Citi believe problems are building for the U.S. dollar in the near term, particularly against the euro, although they see limits as to how far the greenback can actually sell off. 
The U.S.-based bank on Thursday said it expects the euro to rise to $1.1750 over a three-month horizon from around $1.17 now, citing three main factors: 
1/ Fed rate hikes get priced out.
2/ Solid euro zone growth tailwinds from fiscal spending.
3/ Investors shunning the dollar before the U.S. midterm elections.
The Treasury's move this week to double the size of its buybacks at the longer end of the curve adds to the bearishness, Citi said.
But it doesn't expect a broad dollar selloff. 
"While the above factors should weigh on the USD in the coming months, we see a limit to how much the USD can realistically sell off," Citi said. 
"If we assume no Fed action this year, an ECB hike, and a $75 Brent oil, we land on a EURUSD fair value of around 1.17-1.1720, with overshoot potential towards 1.1750 after factoring in the current mis-valuation."
"EURUSD has struggled to sustain above 1.18 over the past year’s range, and we think that will continue to be the case (with major resistance still at the 200-month moving average, currently 1.1850)."
(Samuel Indyk)
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EARLIER ON LIVE MARKETS:
FRENCH STOCKS FACE HEADWIND FROM HIGH BOND SPREADS, BARCLAYS SAYS CLICK HERE
STOXX SET TO SNAP LOSING STREAK CLICK HERE
EUROPE BEFORE THE BELL: STOCKS HEADING FOR WEEKLY DROP CLICK HERE
SO MUCH FOR THE BESSENT BID CLICK HERE