After the first non-farm data of 2025, the US dollar continues to be strong, putting pressure on multiple currencies.
Recently, Goldman Sachs has raised its forecast for the US dollar. Strategists Kamakshya Trivedi and others stated in a report:
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&#34;We expect the dollar to rise by about 5% over the next year, primarily due to the implementation of new tariffs and the continued strong performance of the US economy.&#34;
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This is the second time Goldman Sachs has raised its dollar forecast in about two months, citing the ongoing robust growth of the US economy and the potential inflation triggered by new tariffs planned by Trump, which could hinder the Federal Reserve from easing monetary policy. Goldman Sachs has also lowered its expectations for the euro, predicting that the euro will fall below parity with the dollar within six months, with the exchange rate dropping to 0.97.
<h2>After Non-Farm Data, the Dollar's Strength Continues, Pressuring Multiple Currencies</h2>
The non-farm employment data released last Friday was impressive, further strengthening the market's view of the resilience of the US labor market and boosting the dollar against currencies like the euro and the Australian dollar.
Goldman Sachs has also lowered its expectations for the euro, predicting that the euro will fall below parity with the dollar within six months, with the exchange rate dropping to 0.97. This level was last breached in 2022. Currently, the euro is trading at 1.0225 against the dollar, close to the parity threshold.
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The bank has also lowered its six-month forecast for the British pound to 1.22, down from a previous forecast of 1.32. On Monday, the pound fell 0.7% against the dollar to 1.2126, hitting a new low since November 2023. The current pound/dollar rate is 1.2151.
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Goldman Sachs has also revised its expectations for the Australian dollar, predicting it will drop to 0.62 within three months, down from a previous forecast of 0.66. On Monday, the Australian dollar also fell slightly, trading around 0.61.
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The strength of the dollar is also reflected in the Asian currency market. On Monday, the dollar rose at least 0.5% against the Indonesian rupiah and the Philippine peso, while the Indian rupee fell to a historic low.
<h2>Goldman Sachs: The Dollar May Strengthen Further</h2>
Analysts believe that Goldman Sachs' recent upward revision of its dollar forecast marks a shift in its view on the dollar's trajectory. In September, at the beginning of the Federal Reserve's shift to a loose policy, Goldman Sachs had lowered its expectations for the dollar, believing it would weaken. However, since the low in September, the dollar index has rebounded over 8%.
Although Goldman Sachs' predictions of dollar depreciation over the past two years showed some accuracy in 2023, the strong recovery of the dollar after the elections on November 5 has broken this trend
It is worth noting that Goldman Sachs' prediction for the USD/JPY in March was also relatively accurate, expecting the currency pair to rise to around 155 within three months, with the actual trading range fluctuating between 154 and 161 in June.
Data from Bloomberg shows that investors, including hedge funds, seem to support an optimistic outlook for the dollar. Currently, bullish positions on the dollar have reached their highest level since January 2019.
Despite raising their forecasts, Goldman Sachs strategists still believe there is potential for further strengthening of the dollar. They pointed out that this may partly stem from the economy remaining resilient despite the imposition of tariffs, and that economies sensitive to interest rates may face greater shocks. They wrote in their report:
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&#34;While we acknowledge that forex market participants clearly expect some degree of change in tariff policy, and it is difficult to discern the drivers of recent price movements, we still believe there is room for the dollar to strengthen further.&#34;
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This is Goldman Sachs' second upward adjustment of the dollar forecast within about two months, due to the continued strong growth of the U.S. economy and the potential inflation triggered by the new tariffs proposed by Trump, which could hinder the Federal Reserve's easing of monetary policy. Goldman Sachs expects the euro/dollar to fall to 0.97 within six months

- Following the first non-farm data of 2025, the US dollar remains strong, putting pressure on other currencies.  
- Goldman Sachs has raised its dollar forecast again, predicting a 5% increase due to new tariffs and robust US economic performance, while also lowering expectations for the euro and pound.  
- The dollar's strength is evident in Asian markets, with significant gains against currencies like the Indonesian rupiah and Philippine peso, and analysts suggest further potential for dollar appreciation.

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Goldman Sachs: The US dollar is expected to rise at least 5% in the next year, while the euro is likely to fall below parity with the dollar within six months