Goldman Sachs (GS) conveyed its bearish bias for the EUR/USD pair in its latest research. That said, the US bank revised down its three-month and six-month forecasts to 0.99 and 1.02, compared to 1.05 and 1.10 respective prior estimations. GS also sounds bearish on the EUR/GBP prices as it expected the cross-currency pair to ease to 0.83 and 0.84, from 0.88 and 0.90 previously.
Key quotes
The next 6 months seem likely to be challenging for the Euro area, which is likely to keep EUR/USD close to parity.
Our economists now expect the Euro area to be in recession in the second half of this year; spot data are already slowing materially and further production disruptions are likely.
We think the recent move lower in EUR/USD reflects this shifting growth outlook, and is likely to extend somewhat further given the continued downside risks to activity from more severe gas disruptions and the scope for a much deeper downturn.
Even if the near-term picture improves a bit, we think recent disruptions will be enough to command an ongoing discount in EUR/USD.
Our commodity strategists have highlighted that weather-related uncertainty will be particularly elevated in the first half of winter.
Also read: EUR/USD Forecast: Bulls hesitate near critical Fibonacci resistance
