Goldman Sachs: We're making a major shift in our USD view, EUR/USD forecasts hiked - investingLive
Goldman Sachs has significantly revised its USD outlook, now expecting a weaker dollar and higher EUR/USD forecasts. This shift aligns with our consensus view but implies a larger move than the median forecast, highlighting a growing divergence between spot and consensus.
What the desk is arguing
Goldman Sachs has made a major shift in its USD view, hiking EUR/USD forecasts across the board. The new projections see EUR/USD at 1.1800 by March 2026 and 1.2500 by December 2026, signaling a sustained dollar depreciation.
This revision is supported by Goldman's expectation of a more aggressive Fed easing cycle and a narrowing interest rate differential. The firm sees the EUR benefiting from a structural improvement in the euro area's fiscal stance and current account surplus.
Implicitly, Goldman is rejecting the view that the dollar will remain resilient due to geopolitical uncertainty or a 'higher-for-longer' Fed rate path. Instead, it argues that the market is underappreciating the pace of Fed cuts and the euro area's economic recovery.
Where it sits in our coverage
Our consensus for EUR/USD at end-2026 is 1.2200, with a range among firms of 1.1600 to 1.2500. Goldman's December 2026 target of 1.2500 sits at the very top of that range, well above the median. This makes Goldman one of the most bullish EUR/USD forecasters among the banks we track.
Specific firm December 2026 targets include: - Goldman Sachs: 1.2500 - Deutsche Bank: 1.2500 - MUFG: 1.2400 - ING: 1.2200 - BofA: 1.2200 - Barclays: 1.2100 - JPMorgan: 1.2000 - Morgan Stanley: 1.1600
Goldman's view aligns with the top end of our coverage, shared only by Deutsche Bank. This underscores a bifurcation: the most bullish firms see a significantly weaker dollar, while others are more cautious.
How other firms see it
JPMorgan is more conservative with a December 2026 target of 1.2000, well below Goldman's 1.2500. Morgan Stanley is notably bearish, forecasting 1.1600, arguing that US economic outperformance will persist.
Firms aligned with Goldman's bullish euro view include: - Deutsche Bank: December 2026 target of 1.2500, exactly matching Goldman - MUFG: December 2026 target of 1.2400, slightly below but still bullish
Firms with contrarian views: - Morgan Stanley: December 2026 target of 1.1600, significantly lower - Barclays: 1.2100, below consensus - JPMorgan: 1.2000, below consensus
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Goldman Sachs now forecasts EUR/USD at 1.25 by end-2026, one of the most bullish calls among major banks.
- 02The consensus end-2026 target is 1.22, with a wide range from 1.16 to 1.25, indicating significant uncertainty.
- 03Goldman's shift aligns with our view that the dollar is overvalued, but the magnitude of its forecast is at the extreme, suggesting a high-conviction trade.
Market implications
Goldman's revision could reinforce bullish euro sentiment and prompt other banks to revise their forecasts higher. If realized, a weaker dollar would boost EUR-denominated assets and weigh on US equities. However, the wide dispersion of targets suggests that the market is still debating the path of US rates and euro area growth, implying potential volatility around key data releases.
Risks to this view
Key risks include a more hawkish Fed than expected, a resurgence in geopolitical tensions favoring the dollar, or a slowdown in euro area growth that dampens the euro's appeal. Additionally, if the consensus proves too optimistic, EUR/USD could fall short of Goldman's target, leading to a correction in long-euro positions.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Rabobank | Bearish | 1.1000 |
ING | Bullish | 1.1300 |
MUFG | Neutral | 1.1200 |
Sources & References
How we cover this story
Related news on this pair
EUR/USD Weekly Forecast: Greenback holds firm despite looming US political stalemate
USD resilience despite US political uncertainty suggests safe-haven demand remains the dominant driver; EUR/USD breakdown below 1.1200 month-range may accelerate if risk sentiment deteriorates.
Euro: Rotation into Dollar cash caps gains against US Dollar – ING
EUR/USD upside capped by continued dollar cash rotation despite US tech weakness; Treasury correlation reassertion limits euro tactical strength.
EUR/USD Price Forecast: Declines below 1.1200 as bearish bias holds below key technical resistance
EUR/USD breaks below 1.1200 technical level ahead of data events; watch for Eurozone retail sales and US nonfarm payroll reactions.