Goldman Sachs Says Buy Euro as Risk Aversion Eases

June 9 -- Goldman Sachs Group Inc. advised buying the euro versus the dollar as risk aversion eases, prices of commodities rebound and talk of alternative reserve currencies undermine confidence in the greenback.

“The dollar has appreciated recently on the back of higher risk aversion,” the Goldman Sachs foreign-exchange research team wrote in a note to clients. “We think this offers a good entry point to go long the euro against the U.S. dollar.” A long position is a bet the currency will appreciate.

Risk appetite is reviving with the recovery in global growth expectations, leading to higher commodity prices. As the correlation between oil prices and the U.S. dollar re-emerges, “higher commodity prices will lead to a weaker dollar,” the Goldman analysts wrote today.

Goldman recommends taking a long position in the euro against the U.S. dollar “with a stop on a close below 1.3720 for an initial target of 1.45.”

The dollar weakened 0.6 percent to $1.3978 per euro at 9:04 a.m. in New York, from $1.39 yesterday.