The ECB Has More Room to Raise Rates than the Fed
Citigroup's currency strategists think that once the euro/dollar (EURUSD) rate breaks through resistance at 1.10-1.1033, it will quickly rise to 1.15. They also warn that it may take time to reliably break this resistance level, despite the fact that current prices are trading above this threshold.
Data from China, including the balance of trade and GDP in the coming days could be a catalyst for the growth of the euro against the dollar. By the way, Citigroup’s Fx strategists expect the Fed to keep its rate in May, but they do not rule out a rate hike later in the year.
Overall, the EUR/USD exchange rate is poised for growth as the European Central Bank faces more rate hikes than the Federal Reserve.
At the same time, the Dollar index may decline by 5%-7% in the next 3–6 months. And the main beneficiaries of this decline will be the euro and Japanese yen.
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