Goldman Sachs Research discusses EUR/USD outlook and targets the pair at 0.94 in 3 months and 0.97 in 6-months.
“The Euro is deeply undervalued by most conventional standards, but we see good reason to be skeptical about those valuation estimates at this time. The Euro area’s current account has deteriorated significantly in recent months, and it could swing lower by more than EUR500bn for the year as a whole . Higher prices for scarce energy have driven most of this decline, and we think that could have a material impact on prospective returns for the Euro,” GS notes.
“As a result, our model estimates of EUR fair value have already moved lower this year, and would fall substantially further (close to current spot levels) if the current account remains around current levels,” GS adds.