daily euro dollar
Goldman Sachs emphasizes the need to be cautious about the short-term decline in the EUR/USD pair. Although momentum is weak, the European Central Bank is unlikely to shift to a more aggressive policy stance, which could support the euro in the short term.
Important points:
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Limited ECB guidance: Despite an expected 25 basis point rate cut, the ECB is expected to maintain a cautious approach at this week's Governing Council meeting and not move to clearer forward guidance.
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High hurdle for depreciation: One rate cut cycle at a time means policymakers may need convincing data for each subsequent rate cut, potentially raising the bar for euro depreciation . This dynamic has contributed to the euro's relative resilience this year, even as economic data has weakened further.
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Potential for an aggressive stance: If the ECB adopts a more aggressive stance and deviates from the Fed's policy, it could create a strong situation for EUR/USD to fall. However, it seems unlikely that such changes will occur in the near future.
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Trading Recommendation: Goldman Sachs recognizes the downside risks to the euro and continues to recommend trading in the euro for financing purposes, but simply accelerating trading will not result in significant EUR/USD depreciation. It warns that it is insufficient to guarantee that
Conclusion:
In summary, although there are potential risks to the euro, the ECB's cautious approach and the structure of the rate cut cycle are cushioning EUR/USD against any near-term downside. Investors need to remain cautious as future changes in ECB policy could affect the euro's trajectory.
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