EURUSD could drop to 0.9400 on US-EU policy divergence over three months – Goldman Sachs EURUSD Currencies Banks InterestRate
"The Euro area current account has deteriorated significantly in recent months. Digging into the details, higher energy prices account for about two-thirds of the decline in the trade balance, while the higher cost of manufactured goods from Asia is responsible for most of the rest."
"The ECB has flagged that looming recession risks could lead to a smaller hiking cycle, and recent forward-looking data paint a bleak picture, particularly on the manufacturing side." "As a result, if the current account stays around current levels, our estimate of Euro fair value would fall substantially. We therefore expect that recent EUR depreciation has further room to run, and have downgraded our 3-month forecast forfrom $0.97 to $0.94 , mostly due to the diverging cyclical and policy outlook between the US and Euro area."
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
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