EUR/USD: Citi lists 5 reasons why traders should sell

In a note published today, Citi outlines five reasons it believes traders should remain positioned to sell the euro:

Reason number 1: Markets

"Interest rates, especially short rates, are moving in opposite directions in Europe and the USA."

Reason number 2: Monetary policy

"The ECB and the Fed are going in opposite directions. The ECB must increase the effectiveness of its QE, and also lower the EUR. As for the Fed, it must overcome its fear and raise rates."

Reason number 3: Macroeconomic factors

"European data has not improved enough and inflation remains low. On the other hand, US data is solid."

Reason number 4: International Trade

"The slowdown in the East, particularly in China, is a threat to German activity. Since China also needs to see its currency fall, or at least prevent it from rising, so its actions to achieve this should benefit the USD."

Reason number 5: Technical factors

"The price action looks similar to what happened in 1998-99, a period when the Fed and the ECB were also moving forward in opposite directions. The latest low of the trend is at 1.0458 and the reaction of the currency in light of this will be significant afterwards."

For the record, Citi currently holds a short position EUR/USD from 1.1110, with a stop at 1.1520 and a target at 1.0450.