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Citi See USD Mean-Reverting in Q2, Favouring AUD/NZD Lower, EUR/CHF Higher

USD
  • Citi write that they have been too neutral in their USD view, however are yet to see the case shift to a more structurally bullish dollar backdrop – which they see coming into play in H2 this year.
  • They see the USD that may already be peaking, particularly considering the breakdown in the relationship with yields this year.
  • They see the USD mean reverting lower in Q2, during which G10 relative value can perform, preferring AUD/NZD lower and EURCHF higher (via 0.95 calls, funded via sales of 0.9350 puts). They see technical supporting strength towards 0.97, and eye a tight stop below 0.9474.

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