The euro is trading down 0.14% at 1.4168.
Yesterday the short squeeze in the EURUSD brought the pair to within pips of Citigroup's revised stop loss of 1.4260 even as it got even more bearish on the European currency, setting a new target of 1.3150. Today the bank's FX strategists continue their onslaught, stating in a note that wonders how long the Euro-love will last that "The post-summit EUR rally is driven by a continuing squeeze in short risk positions and unwinding of worst fears of financial contagion, rather than improvement in cyclical fundamentals." Here are their full thoughts on why the time to short the pair, and thus the entire EURUSD-driven market, lower.
From Citi's Steven Englander
The EUR rally in the aftermath of the EU summit is not corroborated by the fairly muted correction in fundamental drivers like sovereign debt risk. Indeed, the summit outcome has brought euro zone government spreads just back to where they were in two weeks ago (Figure 1) and the level of rates in peripherals has barely budged. Measures of relative rate expectations like 2y Germany-US bond yields spreads actually tightened in the last few days....MORE