Goldman Sachs updates EUR/USD predictions, highlighting weaker US assets and a slowing economy leading to capital shifts - VT Markets
At a Glance
Lead — As recently highlighted by Goldman Sachs, the outlook for the EUR/USD pair has shifted, driven by a weaker performance of US assets alongside a decelerating US economy, which is expected to prompt capital reallocations towards the eurozone. Per the full note, Goldman predicts the EUR/USD to reach 1.2100 by Jun26 and 1.2500 by Dec26, indicating a growing sentiment of euro strength amidst these economic shifts. Currently, consensus among major banks positions the pair around 1.1700 for Mar26, pointing to a potential disconnect given the improving conditions for the euro. Traders should monitor upcoming economic indicators as the forecast looks ahead without scheduled high-impact events in the immediate term.
Key Takeaways
- 01Goldman Sachs indicates a bullish outlook for EUR/USD due to weakening US economic conditions.
- 02Projected EUR/USD targets by Goldman call for 1.2100 by Jun26 and 1.2500 by Dec26, diverging from current market consensus.
- 03The current consensus stands at 1.1700 for Mar26, suggesting potential upside if Goldman’s forecasts materialize.
- 04Varying targets from major banks illustrate differing sentiments on the euro's future strength.
Full Analysis
What the desk is arguing
The thesis conveys a more bullish outlook on the EUR/USD based on the macroeconomic backdrop where weakening US fundamentals are influencing capital flows towards the euro. The note from Goldman Sachs underscores the fact that capital shifts are increasingly favoring Eurozone assets, which could further elevate the euro's strength against the dollar.
Goldman Sachs' specific target revisions reinforce this view, with forecasts indicating EUR/USD values of 1.2100 by Jun26 and potentially 1.2500 by Dec26. This contrasts with the current spot at 1.1500, suggesting a significant upward potential. Notably, the expectation of persistent economic weakness in the US will likely catalyze a reallocation of funds toward the eurozone, aligning with Goldman’s insights.
Where it sits in our coverage
Our current consensus target for EUR/USD stands at 1.1700 for Mar26, with a variance range from 1.1300 to 1.2000. Notable forecasts from key firms include: - jpmorgan: Mar26 1.1800 - goldman: Mar26 1.1800 - deutschebank: Mar26 1.1800
The Goldman Sachs view is notably more aggressive than the consensus, especially regarding their final targets where they project a range of 1.2100 to 1.2500 compared to the median range of 1.1300 to 1.2000 suggested by others. This suggests an emerging consensus around a potential upward shift in EUR/USD.
How other firms see it
Several firms, such as morganstanley and mufg, also share a bullish perspective, with both targeting 1.2000 for Mar26. In contrast, firms like citi and bofa have lower expectations, predicting 1.1300 and 1.1700 respectively for the same period. This divergence illustrates varying perceptions of economic conditions influencing the EUR/USD trajectory.
Factors to watch include related movements in EUR/GBP and USD/JPY, as well as central bank signals emanating from the ECB and the FOMC which may reinforce or undermine current forecasts.
Market Implications
Monitor the current EUR/USD level at 1.1500 for signs of upward momentum, particularly as capital flows may accelerate towards Eurozone assets. Traders should remain vigilant for signals from the ECB as any hawkish stance could further strengthen the euro.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Rabobank | Bearish | 1.1000 |
ING | Bullish | 1.1300 |
MUFG | Neutral | 1.1200 |
From the original
Goldman Sachs updates EUR/USD predictions, highlighting weaker US assets and a slowing economy leading to capital shifts VT Markets
Related speeches
4 itemsGoldman Sachs forecasts a Euro rally driven by dollar weakness, expecting EUR/USD to reach 1.25 - VT Markets
The desk anticipates a significant rally in the Euro, driven primarily by a weakening dollar, with a target of EUR/USD reaching 1.25. Per the full note from Goldman Sachs, this forecast is underpinned by expectations of a shift in U.S. monetary policy that could further erode dollar strength. The current market dynamics suggest that traders are positioning for a potential decline in the dollar index, which could provide the Euro with the necessary momentum to appreciate against the greenback.
FX Talking: Forecast table
Lead — The latest FX commentary suggests a stabilizing outlook for the Euro, with forecasts indicating potential resistance around the 1.075 mark against the USD. Per the full note [source], this reflects a cautious optimism as the market awaits clarity from European economic indicators. The Euro has shown resilience despite external pressures, primarily driven by the European Central Bank's (ECB) monetary stance. As we navigate toward year-end, traders should closely monitor cross-border economic data that may influence these positions.
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