Goldman Close Long EUR/USD Recommendation For Small Loss

Goldman Sachs are closing their "recommendation to go long EUR/USD, opened on April 16 at $1.20, similar to current spot levels. The Summary of Economic Projections (SEP) provided with today's FOMC meeting showed a majority of Fed officials now expect at least two funds rate increases by the end of 2023, in contrast to the March SEP, where the median official still expected an unchanged policy rate at that time. The median projection for PCE inflation increased by 1pp for 2021, but by only 0.1pp for both 2022 and 2023; unemployment and GDP forecasts were relatively little changed. In his press conference following the meeting, Chair Powell indicated that participants had begun a conversation on progress toward full employment. While the condition for tapering bond purchases had not been met, Chair Powell indicated that participants expected further progress, and that the discussion on whether to slow bond purchases would continue over the coming meetings. He added in the Q&A that the U.S. economy is on "a path to a very strong labor market". We continue to forecast broad US Dollar weakness, driven by the currency's high valuation and a broadening global economic recovery. However, more hawkish Fed expectations and the ongoing tapering debate look likely to be a headwind to Dollar shorts over the near term."