Adam had the FOMC view from Goldman Sachs here: Goldman Sachs FOMC preview: “Considerable time” will stay (love or hate Goldman Sachs, it is well worth considering their analysis … and then, as always, the risk management is up to you).

OK, so, onto their view on USD and EUR/USD:

  • “Regardless of what happens this week, risk-reward for the USD is skewed to the upside in coming months. That is because forward guidance has been disproportionally important in holding down the Dollar, so that any changes on this front – whether this week or in coming months – are Dollar bullish. Because of this, we also see the potential for Dollar downside as limited in the event of a dovish surprise this week”
  • “The lack of follow-through in EUR/$ since the ECB’s surprise deposit cut has once again raised concern that positioning is heavy, with ABS purchases and potentially even QE priced in. We strongly disagree”
  • “Separately, we think the two big figure decline in EUR/$ around the last ECB meeting has done little more than price the latest deposit cut and certainly does not reflect President Draghi’s intention to return the ECB balance sheet to its early 2012 level (an increase of nearly EUR1trn)”
  • “In short, we think the market remains reluctant to take the ECB at its word and prices only what it can see. This means the steady grind lower in EUR/$ will likely continue, towards our 12-month forecast of 1.20, with a strong take-up at this week’s T-LTRO a potential catalyst for the next move lower”

Source of this report is from eFX, their live tracking is available from here eFX Plus