THE EURO FREE FALL AGAINST THE U.S. DOLLAR

In six months, Goldman Sachs thinks the Euro will reach parity with the U.S Dollar. The Euro has fallen considerably over the last year and is currently at around 1.06 to the Dollar. The Euro hasn't been at parity with the dollar since late 2002. Indeed, the Euro has fallen 24 percent against the Dollar in less than a year,

It is possible Euro trading will be below equal value to the dollar in a year, but over the next couple years Goldman Sachs expects the Euro to fall to record lows against the Dollar.

There are two monetary policies at play. Specifically, to boost Europe's extraordinary weak economy, the European Central Bank is buying bonds with newly-printed money, aka quantitative easing, while the Federal Reserve is far enough along that it's getting ready to raise rates. That means interest rates are falling, sometimes into negative territory, in Europe, and, at least on the short end rising in the U.S. Investors, especially big European ones are answering that by moving their money out of Euros and into Dollars. The simpler way to think about this, though, is that the U.S. economy is in a lot better shape than Europe's. Unemployment is 5.5 percent here and falling fast, while it's 11.2 percent in Europe and barely falling at all.

Goldman Sach’s Euro Outlook

1. 3 month:  $ 1.02
2. 6 month:  $ 1.00
3. 12 month: $ 0.95
4. End 2016: $ 0.85
5. End 2017: $ 0.80