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Goldman Sachs on EUR/USD and USD/JPY outlook.
"The USD rally has been built on three legs – rate differentials, relative equity/tech outperformance, and Brent back above $100 – but only energy and AI look structural; Fed pricing is the shaky one, and we're the most dovish in G10 (vs mkt pricing) there alongside the BoE. All three drivers have been mean-reverting this year so we think EUR may have run a little ahead of fundamentals in the near term and USDJPY for example, has structural downside asymmetry, so it's a bit early to press USD strength here...," GS notes.
"Overall, yes, you have some of those fundamental supports, but it is a fairly mean reverting environment and it's also very difficult to rule out some of the USD negative risks that we saw throughout the year on the fiscal front, on the policy uncertainty front," GS adds.