The euro is only headed down: Goldman Sachs

Amid Greece's Sisyphean drama, the euro has been like a brick—you can throw it, just not very far. But that's only temporary, Goldman Sachs says, sticking with its call for near-parity with the dollar.

"This week's jump in the euro on news of the Greek referendum made no sense to us," the bank's analysts said in a note Tuesday. "We continue to see mounting tensions over Greece as a catalyst for the euro-dollar to go near parity, if contagion to other peripherals causes the European Central Bank (ECB) to accelerate quantitative easing."

In one year's time, the euro will be fetching just 95 cents, Goldman said.

Greece missed a repayment worth about 1.5 billion euros ($1.7 billion) that was due to the International Monetary Fund (IMF) Tuesday, making it the first advanced nation to ever default on a debt to the global financial stability agency. That followed months of contentious negotiations with its creditors over exchanging reforms for another bailout.

Those talks came to a standstill after a surprise move by Greek Prime Minister Alexis Tsipras to call for a referendum on whether to accept the creditors' proposals, even though those proposals may no longer be on the table. The country is now subject to capital controls, meaning funds can no longer be transferred outside the country and ATM withdrawals are limited to just 60 euros a day.

But despite all the drama, the euro only slipped as low as around $1.096 on Monday from around $1.12 Friday.

It fell slightly further on Wednesday, down to $1.1086, having peaked near $1.115 during the day.

"After years of cliff-hangers, the market continues to expect a deal at the last minute, including in the aftermath of the referendum announcement. As a result, few are willing to put on euro downside, even as the odds of a deflationary shock to the Euro zone are rising," Goldman said.

But the bank noted: "We fail to see how mounting tensions around Greece do anything other than reinforce U.S. outperformance over the euro zone, i.e., we see this price action as a fade."