Goldman Sachs lifts 12-month target for European stocks on energy price relief
Goldman Sachs has adjusted its 12-month target for European equities higher, attributing this shift to a decline in energy prices. This is significant as it reflects a positive sentiment toward Europe's economic recovery, particularly in light of recent volatility in energy markets. The relief in energy costs may bolster consumer spending and corporate profitability, ultimately benefiting local currencies against the USD during this critical period. As the outlook brightens, traders will be watching how this translates into currency movements, especially for the EUR.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). This perspective aligns more closely with the outlook from firms like JPMorgan and ING, which also see potential for an uptick in European equities to support the euro against the dollar.
How firms align
JPMorgan's view is in agreement with Goldman, projecting a target of 1.10 for EUR/USD, reflecting optimism for the euro amid improving economic conditions. Conversely, BofA takes a more cautious stance, supporting a lower target of 1.04, highlighting potential risks that may temper the momentum seen in European markets.
What the data shows
Recent analysis indicates that shifts in energy prices have historically impacted the euro's performance, with favorable price movements likely to reflect positively in future forecasts. Traders should remain cognizant of how ongoing energy price trends could influence these currency projections, as highlighted in our research on European market dynamics at /research/euro-outlook.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Goldman's new target of 1.12 signals confidence in European stocks and the euro.
- 02Traders should note energy price trends as key influences on currency movements.
- 03Market watching: bullish euro if energy prices remain stable; key level at 1.075.
- 04Bearish scenarios could arise if energy prices spike unexpectedly.
Market implications
Investors should monitor the EUR/USD level around 1.075, which serves as a critical resistance point. Upcoming economic data releases in Europe could further influence sentiment and establish a clearer direction for the euro. The market awaits indicators that could reinforce the bullish sentiment reflected in Goldman's target.
Risks to this view
Any unexpected surge in energy prices could severely undermine this positive outlook, triggering a reassessment of the euro's strength. Additionally, geopolitical tensions or economic policy shifts within Europe could induce volatility that challenges current projections.
Sentiment by currency
USD EUR+JPY~GBP+Composite USD score: -0.35
Firms mentioned
Sources & References
How we cover this story
Bank desks on this topic
Three reasons Goldman has added another Fed rate hike to its forecast, higher and higher!
A tier-one bank moving to three hikes in the cycle supports the US dollar and front-end Treasury yields, and adds to pressure on rate-sensitive equities and gold. Pushing the first cut back to December 2027 extends the period of restrictive policy, which could weigh on long-durat
Will US Stocks Repeat History?
Why European earnings are defying GDP .keep-white { color:#ffffff !important; } .keep-black { color:#000000 !important; } .gsFooterGrey * { color:#000000 !important; } ul.gsFlushList li { text-indent:-1em !important
Deutsche Bank stands alone with RBA hold call as 31 of 32 economists tip a hike
With a hike close to fully priced, the asymmetry is clear. A hold, as Deutsche Bank expects, would likely knock the Australian dollar lower and rally short-dated government bonds, while a hike would largely confirm what markets already expect. The Reserve Bank of New Zealand’s su