Goldman Sachs has revised its forecast for the US dollar, citing the robust American economy and potential tariff increases that could slow monetary easing. Strategists, including Kamakshya Trivedi, anticipate a 5% rise in the dollar over the next year, driven by new tariffs and sustained economic performance in the US. Despite this upward revision, there remains a risk of further dollar strengthening.
This marks the second increase in Goldman Sachs' dollar forecast within two months, attributed to strong US economic growth and inflation concerns linked to planned tariffs by Donald Trump. A recent employment report reinforced the resilience of the job market, boosting the dollar's outlook against currencies like the euro and the Australian dollar.
Goldman Sachs now expects the euro to fall below parity with the dollar within six months, predicting a rate of 0.97 USD per euro, a level last seen in 2022 amid the European energy crisis. Previously, the forecast was 1.05 USD per euro.
The bank maintains a bullish stance on the dollar against Asian currencies, due to a stronger outlook for the dollar this year. Following strong non-farm payroll data and adjusted Federal Reserve rate cut predictions, Goldman has updated its USD/JPY forecast, raising the three-month estimate to 160, the six-month to 161, and the 12-month to 162. It also increased forecasts for USD/SGD, expecting it to rise to 1.3900 in three months, 1.4000 in six months, and 1.4100 in 12 months.
