Goldman Sachs has lowered its euro forecasts:

  • Sees EUR/USD at 1.29 in 3 months, prior was 1.35
  • Sees 1.25 in 6 months, prior was 1.34
  • Sees 1.20 in 12 months, prior was 1.30

ECB easing encourages domestic portfolio outflows in a search for higher yields, they said. They forecast EUR/USD fair value at 1.19.

An interesting part of the note is that they also say euro shorts are likely overstated and likely at a moderate level. They see “plenty of room” for Draghi to talk the euro lower.