Euro risks downside amid potential US auto tariffs, Euro area growth concerns – Goldman Sachs

Analysts at Goldman Sachs are out with their view on the Euro, given the looming economic and trade risks.

Key Quotes:

“PMIs will be pivotal for determining whether Euro area growth is actually going to trough in Q1. 

We think at least some stabilization will likely be necessary to dispel recession concerns after another downside surprise in German GDP last week. 

And it would be especially helpful for economic activity to start turning the corner now because we think trade headlines could create some new headline risks for EUR this week. 

On the US auto tariff report:

US Department of Commerce... auto tariffs as one option in its report 

The release of this report does not itself raise the odds of tariffs, and some steps by the administration indicate support for auto tariffs may be limited. 

That said, our DC economists still see a meaningful risk (40%) that broad tariffs are implemented at least temporarily, and even the possibility is a concern for EUR.”

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