Goldman Sachs expect EUR/USD under parity in scenario Trump wins US election

Goldman Sachs with a view on the euro, running ‘tariff’ scenarios for the US election outcome:

• if the Republican party win the presidency and Congress could lead to higher tariffs
• 10% U.S. tariff on all imports
• 20% on Chinese products
• tax cuts
• would likely push up inflation
• would likely lead to Federal Reserve interest rate rises, to US rates much higher than in the EU
• could cause the US dollar to rise sharply and euro to drop by up to 10%

GS also run a scenario on a narrower trade war, in which Trump only imposes further tariffs on China, could see the euro fall by around 3%.

GS on a Democratic sweep or divided Democratic government:

• likely result in some initial dollar downside

This article was written by Eamonn Sheridan at www.forexlive.com.