CITI’S TAKE
Macro dynamics of the past two months remain largely intact for FX. USD continues to face near-term cross-currents, with relative growth and terms of trade as tailwinds, but relative rates and US-Iran de-escalation sentiment as headwinds. Our bias remains to sell EURUSD on rallies as more resilient US growth and peaking ECB hawkishness eventually shift relative rates in favor of USD. We thus leave our 6-12m EURUSD forecast unchanged at 1.14. More broadly, resilient global growth expectations, AI demand, and elevated commodities prices should support outperformance in AUD, KRW, and LatAm FX.
