This is Goldman Sachs' second upward adjustment of the USD forecast within about two months, due to the continued strong growth of the USA economy and the potential inflation caused by the new tariffs proposed by Trump, which may hinder the Federal Reserve from easing MMF policy. Goldman Sachs predicts that EUR/USD will fall to 0.97 within six months.
After the first non-farm data in 2025, the USD continues to be strong, putting pressure on multiple currencies.
Recently, Goldman Sachs has raised its forecast for the USD. Strategists Kamakshya Trivedi and others stated in a report:
"We expect the USD to rise by approximately 5% over the next year, mainly due to the implementation of new tariffs and the continued excellent performance of the USA economy."
This is the second time Goldman Sachs has raised its forecast for the USD in about two months, due to the ongoing strong growth of the USA economy and new tariffs proposed by Trump that may trigger inflation, thus hindering the Federal Reserve from loosening monetary policy. Goldman Sachs also lowered its expectations for the EUR, predicting that the EUR will fall below parity with the USD within six months, with Exchange Rates dropping to 0.97.
After the non-farm data, the USD remains strong, putting pressure on multiple currencies.
The non-farm employment data released last Friday performed well, further strengthening the market's view on the resilience of the USA labor market, boosting the USD against currencies such as the EUR and Australian Dollar.
Goldman Sachs also lowered its expectations for the EUR, predicting that the EUR will fall below parity with the USD within six months, with Exchange Rates dropping to 0.97. This level was last broken in 2022. Currently, the EUR is at 1.0225 USD, close to the parity threshold.

The bank has also revised its six-month forecast for GBP down to 1.22, from a previous forecast of 1.32. On Monday, GBP fell by as much as 0.7% against the USD to 1.2126, reaching a new low since November 2023. GBP/USD is currently at 1.2151.

Goldman Sachs has also lowered its expectations for the Australian Dollar, predicting it will drop to 0.62 USD within three months, down from a prior forecast of 0.66 USD. On Monday, the Australian Dollar also saw a slight decline, trading around 0.61 USD.

The strength of the USD is also reflected in the Asian currency markets. On Monday, the USD rose against the Indonesian Rupiah and the Philippine Peso by at least 0.5%, while the Indian Rupee fell to a historic low.
Goldman Sachs: The USD may strengthen further.
Analysts believe that Goldman Sachs' recent upward revision of its expectations for the USD marks a shift in its view on the USD's trend. In early September, when the Federal Reserve's policy turned towards easing, Goldman Sachs had lowered its expectations for the USD, believing it would weaken. However, since the low point in September, the USD index has rebounded by over 8%.
Although Goldman Sachs' predictions of US dollar depreciation over the past two years showed some accuracy in 2023, the strong rebound of the dollar after the elections on November 5 broke 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, while the actual trading Range fluctuated between 154 and 161 in June.
Data from Bloomberg shows that investors, including hedge funds, seem to support an optimistic outlook for the US dollar. Currently, the Call positions for the dollar have reached the highest level since January 2019.
Although forecasts have been raised, Goldman Sachs strategists still believe that the dollar has potential for further strength. They point out that this may partly stem from the economy remaining resilient despite the tariffs, and economies sensitive to interest rates may face greater impacts. They wrote in their report:
"While we acknowledge that forex market participants obviously expect some degree of tariff policy changes and that it is difficult to discern the drivers of recent price changes, we still believe there is room for further strength in the dollar."