EUR/USD Sees Summer Highs Ahead of Fed Decision

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

This possible outcome is based on the assumption that traders will respond to the Fed's decision by selling the dollar, which would weigh on the currency tactically.

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 compared to the shorter-term view.

The EUR/USD pair has found support around 1.1575, a level that 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.