Investing.com – The European Central Bank is holding its final policy meeting later this week, and Citigroup is recommending selling any gains in the euro on this key event.

In an October 15 note, Citi analysts said markets are pricing in a monetary easing of around 49 basis points compared to the other two ECB meetings this year, which could limit the dovish repricing around Thursday’s event.

“We see the possibility of a tactical rebound in the EUR around Thursday’s ECB meeting, which we would like to see unfold in November, along with the materialization of the electoral risk premium in the US,” Citi said.

That said, “we like to fade out any further gains in the EUR as November approaches and the U.S. election risk premium gets better.”

The bank added that there is some evidence of this development as EUR appears to be undervalued in its short-term fair value model and Citi’s currency positioning data suggests adding EUR to the brief position.

“However, our broader currency voting basket continues to be undervalued relative to the Trump betting markets, and as a result we maintain a short position on EURUSD in both spot and options trades,” Citi says. “We would like to sell any retest of the double top at 1.10 – any break above this point risks a move towards our corrected stop at 1.1050, but if this resistance holds, we are more confident of a move towards our (and double top).” target 1.08, with potential exceedance towards 1.07.”

At 05:25 ET (09:25 GMT), it was largely flat at 1.0892, almost 2% lower over the past month.