Insights 
VT 
Goldman Sachs has adjusted its EUR/USD forecasts, citing equity underperformance for Euro-based traders, decreased foreign interest in US assets, and a confirmed US economic slowdown.
US equities appear unchanged in USD terms but have decreased by 8% for Euro traders, making European equities more appealing. The changing US investment climate is encouraging global traders to move away from USD and related assets.
Goldman Sacs EUR/USD Forecast
Recent macroeconomic data suggests a slowing US economy, supporting the case for ongoing USD weakening. Goldman Sachs has revised its EUR/USD targets to 1.17 in 3 months, 1.20 in 6 months, and 1.25 in 12 months. Previously, the targets were 1.12, 1.15, and 1.20 following the Liberation Day policy announcement.
Goldman Sachs maintains a negative outlook on the USD, driven by macro divergence and global capital reallocation. They believe the EUR/USD upward trend will continue, with a revised target of 1.25 in 12 months.
What this all really comes down to is that Goldman sees less return potential in dollar-linked trades over the next year. Their updated EUR/USD forecast points directly at where they think capital is shifting. From our side, this represents more than just currency strength—it indicates movement in broader money flows and investor behaviour.
Their rationale looks squarely at two pressures. First is the weaker performance of American stocks when converted back into euros. Though equity indices may look relatively flat in dollars, someone operating in euros has, in effect, made a sizeable loss. That changes the game for global positioning—other markets suddenly seem far more worthwhile.
Second, a slowing US economy now has real backing in data. Low factory output, softer labour readings, and fading consumer strength—it’s all pointing the same way. If speed matters, then the dollar is decelerating. With that, demand for USD assets begins to thin out noticeably. Fewer overseas investors are allocating into the US, which puts more weight on this currency shift.
Currency Shift Dynamics
From our perspective and through the lens of options and forward markets, implied volatility has not yet caught up to these adjustments. The new EUR/USD targets at 1.17, 1.20, and ultimately 1.25 within a year suggest continued positioning opportunities for those managing mid- to long-term exposure. We see potential pricing inefficiencies here that others will likely begin to close in on.
Blankfein’s team isn’t merely adjusting numbers—they’re shifting the base expectation on where capital should live. For anyone with contracts priced in dollar pairs, this isn’t a trend to ignore. Lagging data is giving signals later than price already is. That’s where the edge lies.
In the short run, we’re keeping an eye on how consistently these pricing adjustments filter into implied forward curves. 3-month tenors have already started to reflect higher EUR premium. But in the 6- and 12-month space, there seems to be some room to reposition or hedge against persistent dollar softness—still at relatively favourable premiums.
It’s not just spot levels either. Interest rate paths, once the USD’s stronghold, no longer provide the same backing. With reduced expectations for further tightening and the eurozone showing slightly more resilience than expected, differentials look less supportive of the dollar than they were six months ago.
Traders should take note of how sentiment is shifting ahead of major economic prints and central bank language. As we’ve seen, even small disappointments on the US side can prompt sizeable re-pricing now that the belief in USD strength is fading.
Look carefully at any positions built on outdated assumptions about dollar momentum. It no longer works to treat the dollar as the automatic safety play. Flexibility now becomes more valuable than predictive certainty. As Goldman’s adjustment shows, the trade is already turning.
