As the dollar rallied for a tenth consecutive session on Thursday, Goldman Sachs rather excitedly reversed its outlook for the currency.
“The dollar has bottomed!” analysts led by Thomas Stolper wrote. “Dollar lows are almost certainly behind us.”
Stolper’s 3-month, 6-month and 12-month euro forecasts are $1.45, $1.50 and $1.40; over the same timeframes, he expects the dollar to reach Y110, Y108 and Y114.
Goldman had previously forecast $1.56 vs the euro within the next three months, and had predicted Y106 for the same period.
Still, the investment bank is hedging its bets, noting the road ahead - at least until the end of this year - may be bumpy.
Potential risks include weak global demand for US exports, oil price volatility, disappointing economic data, unwinds of long dollar positions and portfolio rebalancing at global central banks.
Nonetheless, Goldman says, “the underlying picture has turned much more dollar positive”.
Great!
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