Fed Spurs Goldman, Deutsche Bank to Abandon Bullish View on Euro
- Euro sinks as much as 1.1%, the biggest drop since April 2020
- Goldman says hawkish Fed and tapering debate are headwinds
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The Federal Reserve’s hawkish turn prompted both Goldman Sachs Group Inc. and Deutsche Bank AG to abandon their calls that the euro will rally against the U.S. dollar.
The euro dropped as much as 1.1% to 1.1994 per dollar on Wednesday -- the biggest tumble since April 2020 -- after policy makers signaled the Fed would boost interest rates twice by the end of 2023, which surprised markets. Some even forecast a move next year. The currency breached 1.20, which suggests to some traders that more losses are coming.