Wednesday, August 3, 2011

Goldman Sachs: low demand for both euro and dollar

With much struggle the euro area and the United States are both through the major decisions aimed to improve the situation and reduce risks. Never the less, investors don’t hurry to rush in euro and dollar.  

Strategists at Scotia Capital believe that EUR/USD will trade in range between $1.3950 and $1.4700 and finish the third quarter at $1.45.

The specialists note that, on the one hand, the European economic outlook remains uncertain due to the risk of slowdown combined with austerity measures that will certainly keep euro under pressure.

 On the other hand, dollar will suffer from high US fiscal deficit and debt and deteriorating economic prospects. The evidence for thelatter is weak GDP readings, ISM PMI falling to 50.9 and declining consumer confidence.

Analysts at Goldman Sachs claim that the pair may climb to $1.55 in a year, though, according to their forecast, the single currency will be able to strengthen more due to the general weakness of the greenback than to some euro-related factors.  

As a result, the odds are that EUR/USD will trade sideways for the rest of the year, so it’ probably better to trade another crosses.

daily eurusd 13-47
Chart. Daily EUR/USD

published by FBS Holdings © 2011