Citigroup slashed its eurozone growth forecast to 0.8% for 2025 on November 18, 2025—down from 1.0%—citing escalating U.S. tariffs as a demand shock, with HICP inflation eyed at 2.1% and ECB easing totaling 150 bps. This grim outlook—euro area on recession verge—projects EUR/USD at 1.05 by mid-year, reflecting 0.6% 2026 growth amid trade redirection positives offset by five-quarter drags. As bunds yield 1.9%, Citi’s euro call eyes further cuts in H2 2025, underscoring bloc fragility in global slowdown.
Tariff tempests dominate: U.S. duties shave exports, yet redirection boosts supply, per Sheets’ team, with Q3 GDP at +0.3% Germany masking sequential stalls. ECB’s 2.00% pause post-75 bps trims unlocks credit, yet disinflation from energy drops and euro strength tempers hikes. Reserves at €850 billion buffer, projecting 1% 2024 growth edging to 0.7% 2025 sans retaliation.
Technically, EUR/USD‘s softening etches a descending wedge from October’s 1.1778 peak, RSI at 58 neutral amid 24% euro volumes. Support at 1.1580—50-day EMA—resistance at 1.1620 tests 100-day EMA. Sub-1.1550 risks 1.0500 Fib, rebound above 1.1650 eyes 1.1700. Volatility at 9.5% awaits December ECB.
This euro forecast ripples to STOXX 600 flat on exporters, hedging peripherals. For investors, spotlights EUR’s trade torque. As 2026 looms, Citi’s tilt narrates peril: recession risk versus easing elixir. Track December 12 ECB—dovish slashes propel 1.04, framing tariffs as euro’s tempestuous trial.
