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Citi analysts predict a recovery of the euro to 2009 levels - $1.48 by the end of 2011 and $1.5 at the beginning of 2012.

These are the conclusions of the technical analysis of the euro/dollar pair. The chart of the rate change is very similar to the dynamics of 1991-1995 (the rate of the "synthetic" euro), Tom Fitzpatrick, chief technical strategist at Citigroup, told Bloomberg in an interview. In his opinion, the single European currency may rise to $1.48 by the end of 2011 and $1.5 at the beginning of 2012.

The Fed cut rates from 9.75% in 1989 to 3% in 1993 to support the recovery from the savings and loan crisis. Since 1993, the dollar has been weak. “The yield curve and the rate structure and everything else is very similar to last year,” says Fitzpatrick. The situation is similar now. The regulator has kept rates at a minimum of 0-0.25% since December 2008 as an anti-crisis measure.

The threat of such a scenario this time is the growing concern over the debt crisis in Europe, Fitzpatrick adds. Discussions about increasing the stabilization fund (440 billion euros) continue. A year ago, Citi, on the contrary, predicted gloomy prospects for the euro, the currency fell below $1.2 by the summer.

Today, the euro fell to $1.343 amid speculation about a meeting of regional finance ministers who will try to resolve differences over the terms of debt buybacks using money from the stabilization fund. In Ireland, the opposition is against the buyback program, while in Greece, there is criticism of the IMF and EU demands to sell state assets. "Most investors would like to see the situation in Ireland and Greece resolved, but so far it has not. Accordingly, the euro is still weak," says Simon Derrick, a strategist at Bank of New York Mellon.

Players are also worried about the situation with major German bank WestLB. Germany's Federal Financial Supervisory Authority is involved in talks to rescue it, trying to come up with a restructuring plan. "The news about WestLB is not very positive for the euro at the start of the week," Reuters quotes Jeremy Stretch, currency strategist at CIBC. "The structural weaknesses of the eurozone economy are still there, and some of them are related to the banking sector. And WestLB's problems reflect that." As a result, the euro fell to a three-week low.

Hedge funds that had been betting against the European currency last year were actively buying it in January in the hope that the EU would cope with the debt crisis in the region.

Euro may return to $1.5 level