The euro could reach parity with the dollar by January 2017 — and it could fall as low as 90 cents by January 2018, Goldman Sachs said Friday in a research note.
Goldman GS, -1.53% revised its forecasts for several currency pairs to reflect what it predicts will be a prolonged period of dollar strength DXY, +0.43% as the U.S. economy continues to show strong growth ahead of imminent interest-rate increases by the Federal Reserve.
Goldman said while the eurozone emerged from its sovereign debt crisis in mid-2012, the region continues to struggle with crises related to faltering growth and competitiveness, according to Goldman analysts Robin Brooks, Fiona Lake and Michael Cahill. As a result the euro EURUSD, -0.26% is likely to continue to fall relative to the dollar
The bank also lowered its year-end 2015 forecast for the euro’s value relative to the pound EURGBP, +0.06% to £0.73, from its previous forecast of £0.75. It left its year-end 2016 and year-end 2017 forecasts unchanged at £0.70 and £0.65 pounds.
In other currency trading, Goldman said it now expects the Australian dollar to weaken to 75 cents by the end of 2015, down from its previous forecast of 79 cents as commodity prices continue to weaken. It expects the aussie to hold that level through 2017.
Goldman made their last downward revision to the euro after ECB President Mario Draghi’s speech at the Federal Reserve’s conference at Jackson Hole, Wyo. in August.
Source : Market watch