Goldman Sachs revises its EUR/USD forecasts upward, citing relative equity underperformance for EUR-based investors, diminishing foreign appetite for US assets, and a confirmed slowdown in US economic activity.
Key Points:
USD-Based Underperformance:
US equities may appear flat in USD terms, but for EUR investors, they are down 8% YTD, making EU equities relatively more attractive.
Shift in Foreign Investment Preferences:
A less hospitable US investment climate is pushing global investors toward diversification away from the US dollar and dollar-denominated assets.
Confirmation of US Slowdown:
Recent macro indicators support a narrative of slowing US economic activity, reinforcing the case for continued USD depreciation.
Forecast Revisions:
Goldman raises EUR/USD targets to:
1.17 in 3 months
1.20 in 6 months
1.25 in 12 months
These are up from 1.12, 1.15, and 1.20, set after the Liberation Day policy announcement.
Conclusion:
Goldman Sachs maintains a structurally bearish USD outlook, driven by macro divergence and a global reallocation of capital. The EUR/USD uptrend, in their view, has further to run, with 1.25 now the 12-month target.
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