Eurusd To Rally Higher Goldman

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Eurusd To Rally Higher Goldman

Eur/Usd To Rally Higher, According To Goldman Sachs

Goldman Sachs has issued a new forecast for EUR/USD in which they see the pair rally towards 1.25. The bank has issued this forecast after the Fed Chair's dovish comments.

For now, the US Dollar damage is contained, but it will not stay that way for long. After all, Donald Trump's intentions are clear as he wants lower rates in the USA.

Chinese Yuan To Rally In Coming Months

On top of that, the Fed is now also slowly adopting a dovish approach. So, it makes sense for the EUR/USD to move towards 1.25 during the next 12 months.

Goldman also added that the Federal Reserve will adopt a gradual approach for interest rate cuts. On top of that, the US economy will also slow down gradually, which will ultimately affect the Dollar's value in global markets.

Meanwhile, Goldman believes that the Eurozone's economy will stay strong and expects balanced growth. However, a more important thing is that US exceptionalism will continue to erode.

So with all these things happening, it makes sense for Goldman to forecast a bearish US Dollar against the Euro. In addition, the bank has also forecasted medium-term gains in the Chinese Yuan as they believe it is undervalued.

So, the gains in the Yuan will also help the EUR/USD pair to rally. Just like that, the AUD and NZD will also stand to gain from the rally in the Chinese Yuan.

But if the US labor market starts to deteriorate at a rapid rate, then the Fed will be forced to cut rates early. If that happens, the EUR/USD might achieve its 12-month target a little early.

The bottom line is that Goldman Sachs believes that US Dollar selling will only intensify in the coming months. Meanwhile, the Euro stands to gain from a stronger economy and stronger growth prospects.

But, it's also a reality that lower rates will fuel growth in the US economy, at least in the short to medium term. This could translate to a bull run in the US equity market.

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