Goldman Sachs forecasts a Euro rally driven by dollar weakness, expecting EUR/USD to reach 1.25 - VT Markets

What the desk is arguing

Goldman Sachs is positioning itself bullishly on the Euro, citing that a weakening dollar will propel the EUR/USD exchange rate towards 1.25. This perspective underlines the belief that macroeconomic factors will favor the Euro, particularly as central banks navigate their respective policies.

Supporting this forecast, Goldman’s target reflects an increasing consensus among several firms in the market, with expectations varying slightly but favoring a stronger Euro as firms position themselves to capitalize on projected dollar weakness. The firm’s revised projections also suggest a well-anticipated shift that other analysts may be beginning to embrace.

Where it sits in our coverage

Currently, our consensus target for EUR/USD stands at 1.2200 for December 2026, reflecting a range from 1.1700 to 1.2500 among various firms. Goldman’s view aligns closely with this consensus, given that their targets show a steady commitment to long Euro positions through 2026.

Notable targets from some of the firms include: - JPMorgan: Dec26 target at 1.2000 - Deutsche Bank: Dec26 target at 1.2500 - Morgan Stanley: Dec26 target at 1.1600

How other firms see it

Several firms share similar sentiments aligned with Goldman Sachs' outlook, indicating a growing market consensus towards a stronger Euro. These include analysts from various institutions who have recently revised their forecasts upwards.

• ING is also targeting 1.2200 for Dec26, showing alignment.
• MUFG has set similar targets, indicating they think along the same lines as Goldman with regard to Euro strength.