financetom
Euro-Dollar
financetom
/
Forex
/
Euro-Dollar
/
Euro-Dollar Forecast: Goldman Sachs Maintain Upside Target
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Euro-Dollar Forecast: Goldman Sachs Maintain Upside Target
Mar 22, 2024 2:17 AM

Image © Adobe Images

EUR/USD reference rates at publication:Spot: 1.2174Bank transfers (indicative guide): 1.1748-1.1833Money transfer specialist rates (indicative): 1.2064-1.2089More information on securing specialist rates, hereSet up an exchange rate alert, hereThe Dollar will depreciate further say strategists with Goldman Sachs who have this week confirmed they maintain bets against the currency.

The preferred expression for further Dollar weakness is via the Euro-to-Dollar exchange rate (EUR/USD), which they maintain 'long' exposure to.

Being 'long' an asset is trader parlance for engaging a trade that delivers profit if an asset rises in the future.

Some doubts were cast on whether the Dollar would continue declining following some strong gains made in the previous week on the back of a set of U.S. economic data that pointed to a robust economic recovery, particularly with regards to the employment situation.

Specifically, the data was robust enough for markets to start raising bets that the U.S. Federal Reserve (Fed) might soon 'bite the bullet' and start reducing their quantitative easing programme.

'Tapering' quantitative easing is seen as the first step the Fed will be required to take ahead of raising interest rates, which is in turn broadly considered to be supportive of the Dollar.

But Dollar bulls were subsequently dealt a setback on Friday when all-important U.S. labour market data disappointed, suggesting the Fed might in fact be in no rush to raise rates.

"The US economy added 559k jobs in May and the U3 unemployment rate edged down to a recovery low of 5.8%. But the latest employment report missed market expectations (which were elevated after the earlier ADP result), and did little to dispel concerns that supply frictions are holding back the labor market recovery," says Zach Pandl, Economist at Goldman Sachs.

The EUR/USD exchange rate declined by a notable 0.70% on Thursday June 08 in the wake of the ADP report but recovered half of that loss on the subsequent non-farm payroll report the following day.

However, the Euro is failing to convince it is ready to make a concerted push higher and is seen drifting at 1.2170 at the time of writing.

Above: EUR/USD daily chart showing upside target eyed by strategists.

Secure a retail exchange rate that is between 3-5% stronger than offered by leading banks, learn more.

But for Goldman Sachs, a broader move higher in the Euro-Dollar in place since April is not yet done.

"We expect that the report will ease market concerns about an earlier-than-expected wind down of the Fed’s asset purchases, even if it does not entirely eliminate the possibility of a September taper announcement. The combination of steady Fed expectations and a broadening global economic recovery should allow recent Dollar weakness continue," says Pandl.

Meanwhile, rebounding economic activity and equity inflows have provided a tailwind to the single currency says Goldman Sachs; "issuance of Recovery Fund bonds, which is set to begin soon, could also result in official demand for EUR".

Looking ahead to Thursday's European Central Bank meeting, Goldman Sachs economists expect the governing council to retain language indicating a “significantly higher” pace of asset purchases compared to early in the year.

"Besides the Euro, a more benign US real rate backdrop should be supportive of a variety of EM crosses as well. As we noted last week (and covered in more detail here), EM currencies should benefit over the coming months from cheap valuations, a rebuild of carry from central bank rate hikes, and the vaccine-led cyclical reopening," says Pandl.

Goldman Sachs say their preferred expression for Dollar weakness remains to be long EUR/USD, with a forecast target of 1.25.

But Pound Sterling Live report that one noted currency trader is of the view that the Dollar not weaken, and could even strengthen, in the run up to the June 16 meeting of the FOMC decision.

Brent Donnelly, Senior FX Trader at HSBC in New York says "I think it will be difficult for the USD to sell off further from here."

"The dollar should be stable or go a bit higher between now and June 16," he adds.

Donnelly says the market should be on "high alert for potential taper talk at the June 16 Fed meeting".

{wbamp-hide start}

Smaller banner

EUR/USD Forecasts Q2 2023

Period: Q2 2023 Onwards
Details: Consensus institutional forecast targets + max & min targets.
Contributors: Citi, Barclays, Morgan Stanley & more
Provider: Global Reach Partners
Type: Free Download

Please Access Here
{wbamp-hide end}{wbamp-show start}{wbamp-show end}

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Japanization will See a Trillion Euros Leave the Eurozone say Deutsche Bank
Japanization will See a Trillion Euros Leave the Eurozone say Deutsche Bank
Mar 22, 2024
The outlook for the euro exchange rate complex (EUR) remains overwhelmingly negative says a new note issued by a leading Deutsche Bank analyst which forsees investor money draining out of the single-currency market.With the euro being battered across the board we continue to ask the question - just how low...
DAX Surge Keeps EUR Outlook Weak as Hedging Demand Grows
DAX Surge Keeps EUR Outlook Weak as Hedging Demand Grows
Mar 22, 2024
With Eurozone stock markets powering higher we hear the outlook for the euro exchange rate complex (EUR) will continue to be undermined as investor demand for currency hedges remains elevated.“As the euro weakens further and oil prices stay subdued the case for a robust euro recovery grows stronger by the...
Euro Relief Short-Lived as Secular Dollar Bull-Trend has Further to Run
Euro Relief Short-Lived as Secular Dollar Bull-Trend has Further to Run
Mar 22, 2024
The euro to dollar exchange rate (EUR/USD) has powered higher bringing to end the relentless selling pressure.USD bull trend to extend in line with its longer-term secular trends - roughly eight years up and eight years down on average since the 1970s“Corrective EUR gains in the next few weeks (to...
Euro Exchange Rate Forecast to Hit Parity v US Dollar
Euro Exchange Rate Forecast to Hit Parity v US Dollar
Mar 22, 2024
The euro dollar exchange rate (EURUSD) has been pushed sharply lower amidst a tsunami of dollar buying.The euro has had a tough week and hit new lows on the back of further details concerning the European Central Bank (ECB) quantitative easing programme. This helped to buoy sterling and boost a...
Copyright 2023-2025 - www.financetom.com All Rights Reserved