Why Goldman Sachs expect the euro under parity?

Forex strategists of Goldman Sachs expect EUR/USD to fall to 0.9500 after one year, after three and six months the rate to become 1.0400 and 1.0000 respectively. Forecasts for EUR/JPY pair is to reach 127 in the next three months, 125 - after six and 124 - after a year.

Analysts point out that the EUR/USD and EUR/GBP may weaken significantly, because of the different way in which central banks have taken on the continent, the United States and Britain.



The euro has already fallen significantly over the past 18 months but, according to Goldman Sachs, the trend is still far from exhausted. In a first place, the picture of cash flows are likely to become increasingly negative for the united currency, as investors from the Eurozone will make their funds to foreign assets in search of higher returns. Second, inflation will slow down its pace of growth, which means that the European Central Bank will be forced to continue stimulating policy, keeping pressure on the euro.

At Goldman Sachs believe, that the European economy will increase by 1.7% in 2016 compared with 1.5% in 2015. The base consumer inflation, however, is likely to be only 1%, while the ECB pledged 1.3%. According to strategists at Goldman Sachs, the index will reach 1.7 percent not earlier than the end of 2018.

I still don't beleive in parity.