The US Dollar is usually considered as one of the key indicators of the global economic health. Undoubtedly, this is the world’s major currency. Therefore, any changes in its exchange rate influences all the financial markets and economies worldwide.
Not so long ago, Goldman Sachs made another shocking forecast for the near-term future of the US Dollar. In particular, some of the biggest banks in the world anticipates a major decline of the American currency in 2014.
Can we trust the forecast? Is the US Dollar really likely to collapse next year? Let’s ponder on these questions together with Masterforex-V Academy.
Goldman Sachs On Forthcoming USD Collapse
According to Thomas Stolper, an analyst working for Goldman Sachs who predicted the USD decline versus the Euro earlier this year, the tendency will continue in 2014 despite the consensus forecast that the US Dollar will show some of the most promising dynamics among the majors next year.
In particular, the expert expects the EURUSD exchange rate to hit 1,40 for the first time since October 2011. Meanwhile, 42 out of 46 respondents interviewed by Bloomberg expect the US Dollar to gain almost 8% versus the common European currency next year, thereby hitting 1,28.
By the way, on Friday, EURUSD traded around 1,3728, Masterforex-V Academy reports.
Experts from various banks, including BNP Paribas, Barclays Plc and Morgan Stanley, assume that once the US economy recovers, this will give the Fed an opportunity to start tapering QE3. Still, Mr. Stolper is convinced that we should focus on the fact that the Fed is probably going to keep the rates low (near zero) instead of expecting QE tapering.
He says the forthcoming tapering has already been played out by the market and therefore won't have the desired effect on financial markets when it is eventually on. Still, he admits that the Fed may raise the rates unexpectedly if the economic recovery is more consistent than expected. Anyway, the main scenario implies insufficient support when it comes to the US Dollar.
Experts On Stolper's Forecast
Market Leader Asked several experts from Masterforex-V Academy to comment on the matter:
In particular, Eugene Antipenko assumes that you cannot fully trust anybody in the contemporary financial world. Goldman Sachs is one of the key and most influential financial institutions in the entire world (before 2008, it used to be the world’s biggest investment bank, now it has been on Dow Jones’s list since September 20th 2013). Some experts say that has become common practice for Goldman Sachs to persuade its clients to purchase those assets that the bank wants to get rid of. That is why the bank was subject to several investigations initiated by the SEC a couple of years ago.
Some insider blogs and forums have revealed the information that Goldman Sachs opens certain big-scale trades through the chain of its affiliate broking companies and then orders their analysts to mislead the crowd to eventually move the market in the desired direction to make immense profits.
Eugene Pavlov reminds us that Goldman Sachs downgraded the gold forecast down to $1200 per ounce earlier this year (on Feb 28th, 2013), which was followed by a gold price collapse…
Still, sometimes Goldman Sachs fails to make the correct forecast. For example, on December 21st 2012, Goldman Sachs predicted the devaluation of the Ukrainian Hryvnia against the SU Dollar by 30% in the second quarter of 2013. As you know by now, the devaluation was 9 times as low as the forecast – 8.26 from 7,94 instead of 10,32.
Market Leder: How should traders and investors react to the mentioned forecast made by Goldman Sachs?
Masterforex-V Academy: The only thing the forecast indicates is a strong momentum that will be shown by the US Dollar in the near future. Still, the future direction will be show by the Forex market itself. Still, in order to see the answer, it is necessary to make comprehensive analysis of the market in question:
The chart above indicates a bearish ling-term trend, but the latest bearish move has broken the MF pivot and sloping channel. This means that once the price overcomes 78.89, we will probably see a strong momentum supporting the forecast made by Goldman Sachs. However, in this case, the upward potential of EURUSD will be much higher than 1.40.
If the mentioned level stays unbroken, the bullish trend shown by the USD index since March 2011 will continue. If this is the case, EURUSD will see a downtrend.
The bottom line: Masterforex-V Academy is FOR following the market instead of trying to guess where the market will go in the near future. Obviously, Forex traders do not care about the direction of the trend since Forex makes it possible to trade currencies both ways (up and down).
In between trading sessions, we built an ISR (intersession range) – an exclusive indicator developed by Masterforex-V Academy. The statements provided by students speak for themselves:
If you are looking for an opportunity to learn how to trade Forex successfully, you are welcome to visit Masterforex-V Academy. Beginners can attend the FREE online school for traders and investors under Masterforex-V Academy. Good trading and investing!
