Goldman Sachs has made a resounding statement about the future of the dollar. Indeed, the banking giant anticipates a gradual weakening of the American currency, a direct consequence of the reduction in interest rates by the American Federal Reserve (Fed). The relevance of this announcement lies not only in its impact on foreign exchange markets, but also in overall investment strategies, particularly in a context where cryptos continue to establish themselves as alternative safe havens.
A weakened dollar: Goldman Sachs forecasts
Goldman Sachs has issued a note to its investors, in which the bank warns that the dollar could experience a gradual weakening against other major currencies. Indeed, anticipation of the gradual decline of the dollar, due to the reduction in interest rates, increasingly diminishes its attractiveness on international markets. The Fed's latest decision to cut rates by 50 basis points (bps) played a key role in this forecast, as it reflects a more aggressive posture in the face of a potential economic recession in the United States. The euro and the pound sterling are the main beneficiaries of this situationwith forecasts of 1.15 USD for EUR/USD (+2.67%) and 1.40 USD for GBP/USD (+4.47%).
This forecast is made in a context where the Fed seems willing to act quickly to support the American economy in the face of slowdown risks. According to Goldman Sachs, this weakening of the dollar will be “gradual and uneven”, due to the current strong valuation of the American currency. However, the bar for a significant drop has been “lowered slightly,” paving the way for long-term adjustment. The UK, with its solid growth and a patient Bank of England (BoE), could see its currency strengthen further.
Divergent views and the impact on alternative markets
While Goldman Sachs predicts a gradual decline in the dollar, not everyone shares this opinion. Deutsche Bank, for example, believes that a different political scenario could reverse this trend. Indeed, the markets are underestimating the positive risks for the dollar in the event of Donald Trump's victory in November 2024. Thus, a re-election of Trump could strengthen the position of the dollar against other currencies, in particular thanks to economic policies favorable to international businesses and investors. This divergence shows the complexity of the dynamics surrounding monetary forecasts, where politics plays a key role in shaping markets.
In this context of monetary uncertainty, investors could be tempted to turn to alternative assets, particularly cryptos. A weakening dollar would make cryptos like Bitcoin more attractive to investors wanting to protect themselves against the devaluation of fiat currencies. At the same time, currencies such as the euro or the pound could offer diversification opportunities.
The future evolution of the dollar remains uncertain, with divergent forecasts between major players in the banking sector. While Goldman Sachs anticipates a gradual weakening, Deutsche Bank is banking on a resurgence of the dollar in the event of Trump's victory. This uncertainty could push many investors to reevaluate their strategies, particularly with exploring the opportunities offered by cryptos like Bitcoin and other alternative assets. In any case, the future of foreign exchange markets looks complex.
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