Euro May Drop on ECB Moves Like Dollar After March 18, Citi Says

By Garfield Reynolds

May 7 (Bloomberg) -- The Euro may be set for a sudden slide if the European Central Bank announces plans to buy debt at today’s policy meeting, Citigroup says.

The U.S. dollar dropped after the Federal Reserve announced March 18 it would start buying Treasuries to hold down consumer borrowing costs.

“The present Euro-dollar setup up suggests a non-linear reaction,” analysts led by New York-based Tom Fitzpatrick wrote in a note yesterday. “A dovish surprise looks much more likely to illicit a sharp move to the down side while an as expected outcome may have little material effect.”

To contact the reporter on this story: Garfield Reynolds in Sydney at greynolds1@bloomberg.net