EUR/USD Eyes Summer Highs as Citi Sees Dollar Sell-Off

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

According to Citi, a dovish hike from the Fed is the most likely outcome, which could weigh on the dollar tactically and lead to a retest of 1.17.

However, persistent geopolitical risk premiums and attractive U.S. real interest rates could limit the scale of any dollar decline, underpinning a more constructive six-to-12-month outlook for the U.S. currency.

EUR/USD has found support around 1.1575, which marked the high following the post-Liberation Day rally and has since acted as an important pivot within the pair's roughly 1.14-to-1.18 range over the past year.