EURUSD daily
Goldman Sachs has updated its forecasts for the EUR/USD currency pair and is advocating for a long position in EUR/SEK as part of an inflation hedge strategy.
Key Takeaways:
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Revised EUR/USD Forecasts: Goldman Sachs is adjusting its projections for EUR/USD to 1.07, 1.10, and 1.12 in 3, 6, and 12 months respectively, up from its previous estimates of 1.05, 1.05, and 1.10. The updated forecasts maintain a year-end expectation of 1.10 but indicate less downside in the short term and a more extended recovery of the Euro relative to the US Dollar beyond the peak.
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Long EUR/SEK as Inflation Hedge: Goldman Sachs reiterates its recommendation for investors to take a long position in EUR/SEK with a target of 12.00. The bank believes that Sweden faces a more challenging trade-off due to its economy’s higher sensitivity to policy rates and particular exposure to the manufacturing sector. This position is seen as a way for investors to protect against the possibility of persistently high inflation and elevated interest rates.
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Leveraging Swiss Franc: Additionally, Goldman Sachs advises investors to explore ways to utilize the Swiss Franc’s traditional inflation hedging properties.
In Conclusion:
Goldman Sachs has revised its EUR/USD forecasts to reflect a milder downside in the near term and a more prolonged recovery for the Euro. Moreover, the bank recommends a long position in EUR/SEK to hedge against potential inflationary pressures and higher interest rates. It also suggests that investors consider capitalizing on the Swiss Franc’s inherent characteristics as an inflation hedge.
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