Finance: Goldman Sachs Warns, The Dollar Will Gradually Collapse!

Goldman Sachs 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 of interest rates by the US Federal Reserve (Fed). The relevance of this announcement lies not only in its impact on the foreign exchange markets but also in global investment strategies, particularly in a context where cryptos continue to establish themselves as alternative havens.

A Weakened Dollar: Goldman Sachs Forecasts

Goldman Sachs issued a note to its investors, in which the bank notified that the dollar could experience a gradual weakening against other major currencies. Indeed, an anticipation of the gradual decline of the dollar due to the reduction of interest rates is increasingly diminishing its appeal in international markets. The Fed’s latest decision to reduce its rates by 50 basis points (bps) played a key role in this forecast, as it reflects a more aggressive stance in the face of a potential economic recession in the US. The euro and the pound sterling are the main beneficiaries of this situation, with 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 ready to act quickly to support the US 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 high valuation of the American currency. However, the bar for a significant drop has been “slightly lowered,” which opens the way for a 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 of the dollar, not everyone shares this view. Deutsche Bank, for instance, believes that a different political scenario could reverse this trend. Indeed, markets underestimate the positive risks for the dollar in the event of Donald Trump’s victory in November 2024. Thus, a reelection of Trump could strengthen the position of the dollar against other currencies, notably thanks to economic policies favorable to businesses and international investors. This divergence illustrates the complexity of the dynamics surrounding monetary forecasts, where politics plays a key role in market evolution.

In this context of monetary uncertainty, investors could be tempted to turn to alternative assets, particularly cryptos. The weakening of the dollar would make cryptos like Bitcoin more attractive to investors looking to protect themselves against the devaluation of fiat currencies. Meanwhile, currencies like the euro or the pound could offer diversification opportunities.

The future evolution of the dollar remains uncertain, with divergent forecasts among major banking sector players. While Goldman Sachs anticipates a gradual weakening, Deutsche Bank bets on a resurgence of the dollar in case of Trump’s victory. This uncertainty could push many investors to reevaluate their strategies, including exploring the opportunities offered by cryptos like Bitcoin and other alternative assets. In any case, the future of foreign exchange markets promises to be complex.