Analysts at Goldman Sachs highlight three main reasons for the recent underperformance of the euro against the US dollar.

Key quotes

“EUR/USD is down 1.6% against the majors since early September.”

“EUR/USD is just off fresh year-to-date lows.”

“Over that period, the single currency has underperformed all of our models, where the fundamentals point to some deterioration but not to this degree.”

“We think this underperformance is likely a combination of lower real rate differentials, equity hedging flows and a relative downgrade of European growth.”