Goldman Sachs has raised its forecast for the U.S. dollar, citing the robust American economy and potential tariff hikes, which could slow monetary easing. Strategists, including Kamakshya Trivedi, anticipate the dollar will appreciate by approximately 5% over the next year due to new tariffs and the continued strong performance of the U.S. economy. Despite this upward revision, they believe the risks favor further dollar strengthening.
This marks the second time in about two months that Goldman has adjusted its dollar forecast, primarily driven by the sustained economic growth in the U.S. and President-elect Trump's tariff plans, which may increase inflation and disrupt the Federal Reserve's easing policies. A recent employment report bolstered views on the resilience of the labor market, enhancing the dollar's outlook against currencies like the euro and the Australian dollar, further supporting market optimism for the dollar.
Goldman Sachs expects the euro to fall below parity against the dollar to 0.97 within six months, a level last seen in 2022. Previously, they predicted the euro-dollar exchange rate would be 1.05 in six months. Additionally, Goldman has lowered its six-month forecast for the British pound against the dollar to 1.22, down from a prior estimate of 1.32. On Monday, the pound briefly dropped 0.7% to $1.2126, marking its lowest level since November 2023.
