Citi lowers euro target, citing pressure from a hawkish Fed and Iran tensions.

Citigroup FX strategists expect the euro to weaken against the dollar, citing a more hawkish Federal Reserve stance and renewed tensions between the United States and Iran. "U.S. capital flow dynamics remain supportive of the dollar amid AI tailwinds, attractive real rates, and a rising euro-related risk premium," Citigroup's Daniel Tobon and Brian Levine said in a report. The Citigroup strategists cut their three-month EUR/USD forecast to 1.135 and their six-to-12-month forecast to 1.13.