Goldman Sachs maintains short EUR/CAD ahead of ECB meeting

Goldman Sachs maintains a bearish outlook on EUR/CAD, targeting a move towards 1.44, ahead of this week’s ECB meeting. The company says that although EUR/USD has been hovering around the 1.08 level for around two months due to opposing market forces, the upcoming ECB meeting is expected to highlight the availability of meaningful data from by June, potentially paving the way for rate cuts. Additionally, as Eurozone growth expectations stabilize as the US beats consensus forecasts, Goldman sees asymmetric downside risk for EUR/USD and views the Euro as an attractive financing option under current market conditions.

Key points:

• EUR/USD stability: The currency pair remained stable around the 1.08 level due to market forces balancing, with no immediate factors causing a significant move in either direction.

• Objective of the ECB meeting: The next ECB meeting is expected to reiterate the central bank’s wait-and-see approach until the June meeting, when substantial data for decision-making on rate cuts will be available.

• Growth Expectations: Although growth expectations in the Eurozone have returned to some stability, the United States outperformed consensus forecasts, suggesting potential for continued strength in the dollar against the euro.

• Commercial recommendation: Goldman recommends a short position on EUR/CAD, targeting 1.44, based on its analysis of current market dynamics and expectations of limited upside potential for the euro.

Conclusion:

Goldman Sachs recommends a cautious stance on EUR/CAD, forecasting a move towards 1.44 as the market anticipates Wednesday’s ECB meeting and considers broader economic data. The firm highlights the relative strength of US growth expectations compared to those of the Eurozone, influencing their bearish outlook on the Euro and recommending it as a viable financing option in the current environment.

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