Goldman Sachs still sees euro drop to 0.95

Discussion in 'Market News' started by ForexLive, Feb 17, 2016.

  1. ForexLive

    ForexLive Forum Member

    Sep 2, 2015
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    Goldman Sachs on why they continue to see euro declines From Goldman Sachs: Euro: FX Forecasts: We maintain our EUR/USD forecasts of 1.04, 1.00 and 0.95 in 3, 6 and 12 months, which we reverted to on January 21. This implies EUR/¥ at 127, 125 and 124 in 3, 6 and 12 months. We continue to believe that EUR/USD and EUR/GBP will move substantially lower on diverging growth and monetary policy outlooks. The EUR has already weakened significantly over the last 18 months, but we think this trend has a long way to run. In particular, we see a couple of longer-term fundamental forces at work. First, the flow picture should turn increasingly EUR-negative as Euro area residents send funds abroad and reserve managers allocate away from the EUR. Second, we think there is a structural element to disinflation in the periphery as it continues to improve competitiveness compared with the core of the Euro area. As a result, our view is that inflation will be slower to pick up than during a normal cycle, in line with projections from our European team, which show HICP inflation reverting to target only slowly. This will keep ECB policy accommodative, maintaining downward pressure on the EUR.

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