Forex Flash: EUR/USD forecasted at 1.4000 over coming months – Goldman Sachs

FXstreet.com (Barcelona) - According to the Economics Research Team at Goldman Sachs, “We have changed our EUR/USD forecast to 1.4000 flat over the next 3 and 6 months, from 1.2500 and 1.3300 previously – spot has pushed through our previous forecasts as the Euro area risk premium was unwound, and we expect this to continue.”

The sovereign crisis led to deep-rooted market concerns about the political viability of the Euro area. Many investors initiated tail-risk hedges, often in the form of short EUR/USD positions. Since the ECB’s OMT announcement, the need for these tail-risk hedges has diminished and risk premia in many Euro area assets have declined since last July. This process can continue further.

“Several benchmarking exercises suggest a move to EUR/USD 1.40 is likely, but we would assume that Euro area and ECB policymakers would respond to currency appreciation beyond that level. Aside from political issues, the external balance of the Euro area remains in a very solid position, which stands in contrast to the situation in the US, and this relative picture is positive for EUR/USD.” the team adds.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

RELATED TOPICS