Goldman Sachs cut its EUR/USD forecasts (by not very much)

Posting as an ICYMI, Goldman Sachs expect the US dollar to be “stronger for longer.”

Citing:

• upgrades to already-robust US growth forecasts
• therefore the FOMC will cut rates later and more gradually
• most other developed market economies will begin their rate cutting cycle sooner with sequential rate cuts
• U.S. election should limit portfolio flows to other jurisdictions when both candidates have proposed more fiscal support and trade restrictions

GS says:

• “This opens some policy divergence in our baseline outlook, which leans in the direction of a ‘stronger for longer’ U.S. Dollar”
• “Importantly for FX, the rate cuts we anticipate are unlikely to be significantly negative for the Dollar because they are unlikely to erode the Dollar’s position as a relatively high carry, safe-haven currency with strong capital return prospects.”

EUR/USD forecasts

• $1.05 in three months, $1.05 in six months and $1.08 in a year
• from $1.08, $1.10 and $1.12 respectively

This article was written by Eamonn Sheridan at www.forexlive.com.