Goldman Sachs

Global FX Strategy 2026

LIVE10 January 2026USD bearish

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EUR/USD

Name: Investment Bank FX Research Directory
Creator: FX Bank Forecast
License: https://fxbankforecast.com/terms
Keywords: bank FX research, investment bank reports, FX strategy, institutional research directory, bank forecasts

Structural re-rating, not just a USD story

Bullish

GS Forecast Path

vs Prior Forecast

Current target: 1.25Prior target: 1.22Revision: +2.5%

Cross-Firm Forecast Comparison

Key Drivers

European fiscal expansion

Fed-ECB rate differential

Relative growth momentum

Real yield convergence

German industrial recovery

All Firm Targets (Dec '26)

GSBullish1.2500

DBStrongly Bullish1.2500

MUFGBullish1.2400

INGBullish1.2200

BofABullish1.2200

BARCModerately Bullish1.2100

JPMModerately Bullish1.2000

MSBullish (H1), Fading (H2)1.1600

Key Issues for 2026

1.German fiscal expansion is a game-changer for EUR fundamentals

2.EU defense spending coordination adds structural EUR demand

3.EUR/USD has positive convexity to Fed easing

4.European growth convergence with US supports EUR on crosses

5.Fiscal multiplier effects will take 2-3 years to fully materialize

Risk Scenarios

Very bullish1.30+

US recession forces aggressive Fed cuts while European fiscal delivers above expectations

Bullish - GS base case1.25

Fed delivers 75-100bp of cuts, European fiscal expansion gains traction, growth converges

Neutral1.18-1.20

Fed on hold, European fiscal delivers but offset by geopolitical risks

Bearish1.10-1.12

US exceptionalism returns, ECB forced to cut aggressively, fiscal plans delayed

Analysis Summary

Bullish EUR on structural fiscal re-rating in Europe. German defense and infrastructure spending, combined with broader EU fiscal coordination, creates a multi-year tailwind. EUR/USD target of 1.25 reflects both USD weakness and EUR-specific strength. The 'different' part of dollar downside is that EUR captures a disproportionate share.

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