Goldman says go long euro/dollar, target $1.37
Goldman Sachs on Thursday has recommended going long euro against the US dollar on the belief that European sovereign debt tensions will eventually ease.
January 14, 2011 / 15:05 IST
Goldman Sachs on Thursday has recommended going long euro against the US dollar on the belief that European sovereign debt tensions will eventually ease.
"Our view has long been that European sovereign tensions will ultimately abate on a combination of better fiscal coordination, support from the strong Eurozone countries for the periphery, solid growth in the Eurozone," Goldman said in its latest research note.It added that euro zone policymakers' continuing work to further improve the region's fiscal policy framework will help member countries down the road. In addition, pledges of support from the world's largest currency reserve managers led by China and Japan to buy euro zone peripheral debt will help reduce the risk premium on these countries.On the other hand, Goldman said it continues to see that current U.S. fundamentals are consistent with a gradual dollar depreciation. It cited the country's large current account and fiscal deficits, which will remain an obstacle to strong investment inflows into the United StatesGoldman's initial target is $1.37, with a one-day stop on a close below $1.2850.On Wednesday, the U.S. bank recommended going long German stocks, which was implicitly a long euro position.The euro rose as high as $1.3363 on trading platform EBS and was last trading up 1.7% at $1.3361 . Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
