I posted a little earlier on Goldman Sachs and the European Central Bank (ECB) decision

Goldman Sachs expect the EUR/USD to fall 300 points

Its attracted a lot of interest, unsurprisingly, so a bit more detail direct from GS now (bolding mine):

  • Our rationale boils down to the following. If the ECB eases again tomorrow, something that President Draghi essentially pre-­committed to in October, it will mean that the ECB has eased twice in 2015, precluding further easing on a reasonable horizon.
  • It is thus important - both for ECB credibility and, more important, for reversing the lowflation dynamic - to make tomorrow's easing a material event, i.e. to surprise the market.
  • We continue to think that the hurdle in this regard is relatively low and see a 2­-3 big figure drop in EUR/$ on the day, with parity by year­end and 0.95 (our 12­month forecast) potentially reached as early as end­-March.

The note goes on ... but Brooks does address the positioning argument,:

  • Certainly, it is true that speculative shorts have built in the CFTC data ... but - as we have shown in past research - that sub­set of the market tends to lead, i.e. broader positioning is likely more modest.
  • And of course it remains the case that downside skew in EUR/$ is modest compared to the run­up to the Jan. 22 meeting.
  • In short, we think risk-­reward to short EUR/$ into tomorrow's meeting remains compelling and we anticipate a 2­-3 big figure drop on the day