Goldman Sachs backs the euro as the dollar hits two-month lows

Goldman Sachs backs the euro as the dollar hits two-month lows

A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange.

Goldman Sachs has recommended investors go long on the euro, as the dollar touched its lowest point since early March on Monday.

A long position is the purchase of an asset in the expectation that it will rise in value. During Monday morning trade in Europe, the dollar index was down 0.5% against a basket of major currencies, to trade at 91.156 - it's lowest level since March 4.

On Friday, Goldman Sachs upped its forecasts for the euro against the greenback to suggest more appreciation in the near term. It raised its three-month target to $1.25 from $1.21, while holding its 12-month forecast at $1.28.

Analysts, led by Co-head of Global FX, Rates and EM Strategy Zach Pandl, also issued a new long trade recommendation for the euro with a $1.25 target price and a stop of $1.175, meaning Goldman will abandon the trade if it the euro sinks below that level. The common currency was changing hands at $1.2032 on Monday.

"Market expectations for European growth should improve over the next few months on the back of faster vaccinations and falling Covid-19 hospitalizations," they said. To