Goldman Sachs is forecasting some stabilization of the US dollar

The giant US investment bank Goldman Sachs has updated its assessment of the US dollar in its latest research note. According to the bank, the Fed's changed expectations have supported the dollar for the past two months. However, since the tapering has now largely been priced in and the currency has become stronger as a result, continuing the process should no longer drive the dollar higher from this point on. The article states: "We therefore expect the dollar to stabilize in the coming weeks and potentially depreciate against certain currency pairs with attractive domestic fundamentals." Regarding the risks to its outlook, the bank notes that several factors could prevent more sustained dollar weakness, including the surprising strength of the non-farm workforce report released this week, persistently high US inflation and / or the dot plot "the FOMC meeting in September, which could show up to four more rate hikes in 2024. Regarding one direction, they added, "We expect the dollar to depreciate across the board over time as we anticipate the global economic recovery to continue and that a slowdown in domestic growth and a Lower inflation will allow the Fed to hold rates hike through the third quarter of 2023. For this trend to prevail, however, markets may need clearer signs that the delta breakouts are behind us and that inflationary pressures in the US are easing Has."