Citi flags a scope for further EUR downside in the near-term.
"After 11 hours of tense talks that ended early Tuesday, Germany Chancellor Merkel and state leaders extended existing lockdown measures for four more weeks. However they failed to reach an agreement on tougher measures. “We are now in a very, very serious situation,” she acknowledged," Citi notes.
"We believe that EUR remains vulnerable to lockdown and vaccine risks for the foreseeable future. The latter has seen significant moves, with circuit breakers triggered in the Borsa Istanbul 100 Index today. Some risk reduction in broader EM may make sense, though there may be some pain given long positioning in EM," Citi adds.