Dovish Hike Could Send EUR/USD Back Towards Summer Highs

Citi strategists say EUR/USD could move back towards its summer highs near 1.17 if next week's Federal Reserve decision triggers a 'sell the news' reaction in the dollar.

This would be due to a 'dovish hike', which is seen as the most likely outcome, weighing on the dollar tactically and sending EUR/USD back towards its previous highs.

The strategists note that geopolitical and energy risks could limit the greenback's downside, making it unlikely for EUR/USD to reach 1.17 immediately.

A 'dovish hike' from the Fed would mean a rate increase with a dovish tone, indicating a less aggressive monetary policy stance than expected.