EUR/USD: PBoC and less EU bond outflow may underpin the euro  - CitiBank

According to analysts at CitiBank, less bond outflow from the European Union and stimulus from the People's Bank of China may support the euro. 

Key Quotes: 

“The ECB announced to end the bond purchasing program by end-2018. We expect the bank to start the policy normalization in 2019. With bond supply rising to positive value, less EU bond outflow may support the EUR. Besides, loosening monetary policy by the PBoC may spur EU’s export to China, which may underpin the EUR.”

“The January Eurozone flash PMIs, reporting further declines in new orders and exports, may reflect further weakness in EA economy, which may restrain the EUR.”

“This week will have FOMC meeting. Anything less than saying that the committee made a decision regarding ending balance sheet reduction “earlier” or with a larger terminal balance sheet size may be a disappointment for risk assets.”

“As EUR/USD’s RSI traded near oversold territory, downside risk may be limited and the pair may range trade between 1.1216-1.1621 in short term.”