Goldman Sachs recommends shorting the euro against the Australian dollar with a target of 1.5750, stating that the energy shock and macro tailwinds will push the exchange rate lower.

(1) The Goldman Sachs strategist team led by Kamakshya Trivedi recommends shorting the euro against the Australian dollar, with a target of 1.5750 and a stop loss at 1.6520. They expect EUR/AUD to drop to its lowest level since early 2023. (2) The reasons for a bullish outlook on the Australian dollar include: solid global economic growth, improved terms of trade for energy and metals sectors, notable fiscal resilience, and attractive interest rate differentials thanks to the highest policy rate among G10 countries, all of which will support the Australian dollar. (3) The bearish case for the euro is due to Europe still being at the center of lingering global energy shock risks, ongoing pressure on terms of trade, and the euro facing moderate weakening risks. In addition, limited domestic disruptions make it an especially attractive funding currency (including against the Australian dollar).