Goldman Sachs Long the Euro, Short the Dollar (GS, UDN, FXE)

Goldman Sachs (NYSE:GS) is betting against the dollar and bullish on the the euro.  Your weapons of choice for playing the trends are the PowerShares DB US Dollar Index Bearish (NYSE:UDN) and the CurrencyShares Euro Trust (NYSE:FXE).

Goldman bets against the recently rising dollar, saying clients should buy euros that it forecasts will rise to $1.55 in three months. “The recent positive growth impact from the inventory cycle and fiscal stimulus is likely to taper off during 2010," the bank said, adding that the dollar tends to weaken in the last two weeks of December. Currently: Euro at $1.4579.

(Bloomberg.com) The recent positive growth impact from the inventory cycle and fiscal stimulus is likely to taper off during 2010,” analysts at Goldman Sachs wrote. “On the other side of the Atlantic, we would assume that a pretty negative scenario for the Greek budget is fully priced given how much sovereign spreads have widened in recent weeks.”

Investors were most negative on the euro since December 2008 according to the positions tracked by Goldman, the analysts wrote. As the result, the market offers “an attractive entry level” to buy the euro, and a rise to its three-month forecast of $1.55 is “possible,” the analysts wrote.

If you care to play at home along side Goldman, you do so with betting against the U.S. Dollar via the PowerShares DB US Dollar Index Bearish (UDN) and going long the Euro using the CurrencyShares Euro Trust (FXE).

Here the Google Finance links to the ETFs (closing price as of 12/16/2009):