Goldman Sachs Euro To Dollar Forecast: EUR/USD Rally To 1.25 - Exchange Rates Org UK
Goldman Sachs has set an assertive forecast for the euro against the dollar, projecting the EUR/USD to rally to 1.25 by December 2026. This outlook is built on expectations of a robust European economy coupled with the potential for a dovish tilt from the U.S. Federal Reserve, which could weaken the dollar further against the euro.
What the desk is arguing
The desk is aligned with Goldman Sachs' optimistic forecast for the EUR/USD, suggesting that the euro will strengthen significantly in the coming months. Factors driving this bullish outlook include improving economic conditions in the Eurozone and a potential shift in U.S. monetary policy that may benefit European currencies.
This view stands in stark contrast to more cautious projections from some institutions, which anticipate slower growth in Europe or a sustained strength of the dollar due to tighter U.S. monetary policy. The balance of economic indicators will be crucial in determining the direction of the pair over the near term.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Goldman Sachs predicts EUR/USD to reach 1.25 by December 2026.
- 02Current consensus shows a median target of 1.22 for EUR/USD by the end of 2026.
- 03Expectations for the ECB's policies and the U.S. Federal Reserve's approach will heavily influence currency movements.
Market implications
If Goldman Sachs' forecast materializes, it could lead to significant adjustments in currency trading strategies, particularly amongst hedge funds and institutional investors that might position themselves for a weaker dollar. Additionally, this could provide a lift to European asset valuations and impact cross-border investments.
Risks to this view
Key risks include unexpected economic downturns in the Eurozone or continued hawkishness from the Federal Reserve that could support the dollar. Additionally, geopolitical tensions or unanticipated inflationary pressures in either economy could also lead to volatility in the EUR/USD pair.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Rabobank | Bearish | 1.1000 |
ING | Bullish | 1.1300 |
MUFG | Neutral | 1.1200 |
Sources & References
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