Goldman Sachs notes a notable shift in market sentiment regarding widespread short positions in the USD, suggesting caution over how much further USD weakness can persist.
Key Points:
There is growing caution about the extent of USD weakness driven solely by a reevaluation of Fed and US exceptionalism.The market is currently heavily short on USDs, prompting a resurgence in interest for EUR/USD downside.Recent data from Europe has led to increased expectations for the next ECB cut, influencing sentiment.Goldman Sachs’ strategy team indicates that the fair value for EUR/USD, based on March 2025 rates pricing, is closer to 1.0950.
Conclusion:
The analysis highlights a potential stabilization in USD valuation amid heavy short positions, with the EUR/USD fair value reflecting adjustments in market expectations.
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This article was written by Adam Button at www.forexlive.com.
