A critical period looms for the euro, says Goldman Sachs, which increasingly views its 12-month EUR/USD forecast of 1.20 as a stretch. Global industrial activity seems to be improving, which means euro area growth may soon trough as well. A resolution or long extension to Brexit talks would reduce downside risks to the euro. "Third, the tight range for EUR/USD has held despite substantial private investor outflows-possibly due to a persistent bid from sovereign buyers-so downside for the currency may be limited as well," Goldman says. Still, if growth doesn't rebound fails over the next 1-2 months, the ECB might ease more at its June meeting to send the euro lower. "We are therefore sticking with our base case for now, but risks are skewed to the downside," Goldman says. The EUR/USD is at 1.1219 early on Monday.
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