Goldman raises 3-month euro / dollar forecast to 1.15


Goldman Sachs Group Inc. strategists Zach Pandl and Kamakshya Trivedi raised their quarterly forecasts for the Euro / Dollar parity from 1.10 to 1.15.

In his note Saturday, Pandl commented, “We think that the euro may ultimately turn the corner,” based on five factors.

The euro / dollar parity was at 1.1319 below 0.1 percent today.

The five factors mentioned by Pandl are as follows;

Improvement in industrial activities with the increase in automobile production in Germany.Relatively loose financial conditions, low oil prices and financial incentives were also cited as potential sources of support for the common currency.Potential for a more hawkman, the President of the European Central Bank, may influence the outlook for policy rates.Analysts said, “In our opinion, the European Central Bank has less potential for relaxation than the Fed, so they may face the appreciation of the euro even if they do not want it.”Positioning: Active FX investors are quite short in the euro and closing the short positions can support the euro.

On the other hand, the note showed that the downside risks, especially the European Central Bank’s response to the downward trend in global trade activities with further loosening.


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