Goldman Sachs say the USD is now 'meaningfully overvalued' and their view ahead is skewed to the downside for the dollar.
However, on euro:
We are cautious EUR and satellite currencies over the near-term due to
- lockdowns
- and ahead of potential ECB easing next month
The note is longer but that's it in a nutshlell.
What do GS like instead?
We therefore prefer expressing pro-growth views through CAD and AUD
- Both Canada and Australia are handling COVID fairly well and their central banks should be done cutting rates.
- We think JPY can appreciate despite higher bond yields on more favorable net portfolio flows.
- We forecast further Yuan gains, with USD/CNY falling to 6.30, as relatively high yields attract inflows
GS outlook for a weaker USD underlies much of their other views: