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EUR/USD: Goldman Sachs continues to expect fall to 1.00, 0.95 and 0.90 within 12, 24 and 36 months
In an analysis released Friday following the NFP report, Goldman Sachs takes stock of the EUR/USD pair:
"We continue to forecast a decline of the EUR/USD to 1.00, 0.95 and 0.90 respectively within 12, 24 and 36 months, mainly due to the interest rate differential.
In the short term, we might think that tensions in peripheral bond markets could push the euro down, particularly due to concerns about Italian banks, as was the case in 2012 after Mario Draghi's "whatever it takes" speech.
However, our studies show that deposits in the euro area have held up well during the ups and downs of the crisis (except in Greece), and recent concerns are unlikely to cause substantial capital flight, especially as the ECB supports the bond markets with its EQ.
In conclusion, even though we maintain a bearish view due to economic and monetary divergences, we believe that tensions in the peripheral European countries will remain a secondary factor in the evolution of the euro-dollar on the forex."