2026 Outlooks - Goldman Sachs
The desk posits that the easing of monetary policies by key central banks could lead to a weakening of the dollar against major currencies, particularly the euro. Per the full note from Goldman Sachs, this shift is anticipated as economies begin to recover from post-pandemic constraints, creating a supportive environment for EUR/USD appreciation. Current positioning suggests traders are increasingly bullish on the euro, with speculative net positions leaning in favor of the common currency. With a consensus target set at 1.075, the outlook indicates a potential upside in the EUR/USD pair for 2026.
What the desk is arguing
The desk asserts that a dovish shift from major central banks may pave the way for a stronger euro relative to the dollar. This perspective is supported by Goldman Sachs, which indicates that monetary easing could foster an environment conducive to currency appreciation as economies rebound from recent challenges.
The evidence supporting this stance includes recent trends in speculative positioning, showing a growing inclination among traders to bet on euro gains. As noted, the positioning reflects a broader expectation of European economic revival, juxtaposed against the U.S. dollar, which is likely to come under pressure as rate hikes pause.
Where it sits in our coverage
Our current consensus target for EUR/USD stands at 1.075, with a range from 1.04 to 1.12. Notable predictions include:
This outlook from the desk aligns closely with jpmorgan, sitting at the upper end of the anticipated range, while diverging substantially from the more conservative call from bofa.
How other firms see it
Other firms share a mixed perspective, with jpmorgan aligning with the optimistic view on the euro’s prospects, while bofa takes a more cautious stance on the dollar's trajectory against the euro.
Traders should pay attention to the broader impacts of ECB and Fed policy decisions, which significantly influence the EUR/USD dynamic. Economic indicators such as inflation rates and GDP growth forecasts will also be crucial for shaping market participants' outlooks moving forward.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Expect increased euro strength as central banks ease policies.
- 02Current speculative positioning favors euro gains.
- 03Consensus target for EUR/USD is set at 1.075.
- 04The EUR/USD rate will be influenced by central bank communications.
Market implications
Traders should monitor the 1.075 level closely, as it serves as the consensus target. With no upcoming high-impact events in the next month, the focus may shift to underlying economic indicators and central bank signals for guidance on the EUR/USD outlook.
Risks to this view
A reversal in the euro's projected strength could occur if the Fed signals a stronger-than-expected tightening trajectory. Additionally, any deterioration in European economic indicators relative to the U.S. could also undermine the bullish outlook on the euro.
Sources & References
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