3 reasons for the weakness of EUR from Goldman Sachs

Goldman Sachs notes the weakness of the euro and EUR/USD nudging year to date lows  is down 1.6% against the majors since early September EUR/USD is just off fresh year-to-date lows Over that period, the single currency has underperformed all of our models, where the fundamentals point to some deterioration but not to this degree Offers up 3 reasons, none of which should come as much surprise, but a useful quick summary nonetheless: we think this underperformance is likely a combination of  lower real rate differentials (despite European nominals leading the charge higher, the change in policy expectations is not enough to offset the shift in inflation compensation),  equity hedging flows,  and a relative downgrade of European growth EUR/USD chart YTD: Invest in yourself. See our forex education hub.

3 reasons for the weakness of EUR from Goldman Sachs

Goldman Sachs notes the weakness of the euro and EUR/USD nudging year to date lows 

  • is down 1.6% against the majors since early September
  • EUR/USD is just off fresh year-to-date lows
  • Over that period, the single currency has underperformed all of our models, where the fundamentals point to some deterioration but not to this degree

Offers up 3 reasons, none of which should come as much surprise, but a useful quick summary nonetheless:

we think this underperformance is likely a combination of 

  • lower real rate differentials (despite European nominals leading the charge higher, the change in policy expectations is not enough to offset the shift in inflation compensation), 
  • equity hedging flows,
  •  and a relative downgrade of European growth

EUR/USD chart YTD:

Goldman Sachs notes the weakness of the euro and EUR/USD nudging year to date lows 
Invest in yourself. See our forex education hub.