From Goldman: We have changed our forecasts to project more Dollar weakness. Since the last revisions to our forecasts, the Dollar decline has roughly tracked the expected path. Large structural imbalances in the US are highlighted by weakness in the tradable goods sector. The outlook for monetary policy differentials and BBoP trends remains USD-negative. Dollar weakness is common during periods with slowing GLI momentum. We now see EUR/$ at 1.45, 1.50 and 1.55 in 3, 6 and 12 months, and $/JPY at 82, 82 and 86. Since we moved to a more explicit Dollar weakening path last autumn, FX markets have broadly followed the expected trajectory. In many cases, the Dollar has now weakened well beyond our near-term forecasts and the driving forces of continued gradual depreciation are intact. We review the key arguments behind our view and focus specifically on Dollar performance in the context of the global business cycle and the latest BBoP trends. Our major FX forecasts are revised to reflect continued further USD weakness. Dollar Decline To Continue In a nutshell, the main reason for broad-based Dollar weakness is the persistence of economic imbalances in the US. US economic output remains geared towards non-tradable sectors, while the large current account deficit and the structural decline in manufacturing employment suggests weakness in tradable goods. This situation has several Dollar-negative implications: The structural current account deficit causes constant external funding pressures. For the Dollar to stabilise or even to rally, investors need to be convinced of the case for additional long-term investments in the US. With unemployment still high, fiscal consolidation looming and continued weakness in the real estate sector, the growth outlook remains less compelling in the US than in many other regions or countries. This makes it even more difficult to fund the current account deficit with investment inflows. The cyclical factors discussed in the previous point suggest this it is also highly likely that Fed policy will remain more accommodative than in most other countries. Interest rate differentials will likely remain USD-negative. The case for Dollar depreciation will strengthen as fiscal policy becomes increasingly tight in the US. The likelihood of early monetary policy tightening would also decline with tighter fiscal policy, as highlighted by our US economists. Structural and EM-related upward pressures on crude prices add to the imbalances. All else equal, real disposable income in the US would decline and, hence, so would domestic demand, adding to cyclical headwinds. Moreover, the rising fuel bill would increase the nominal trade gap and therefore the external funding needs. Too funny. Strong EUR sell. And buy more 1.4200 pu options= risk free money.