Why Goldman Sachs Thinks the Dollar’s Best Days Are Over
The US dollar may be entering a long period of decline, according to Goldman Sachs.
In a recent podcast, the bank’s chief economist Jan Hatzius suggested that the greenback’s recent slide isn’t just a temporary slump—but a symptom of deeper, more persistent problems.
Despite signs of recovery in the American economy following turbulence earlier this year, the dollar has continued to lose ground. Hatzius notes this disconnect points to broader, structural forces at play, rather than short-term market sentiment.
At the heart of the issue is America’s massive current account deficit, which topped $1.1 trillion in April. That gap, created when a country consumes more than it produces, must be financed by foreign capital. But with growing concerns over things like the Federal Reserve’s independence and reduced foreign appetite for US assets, that inflow is becoming harder to sustain.
The result? Pressure builds on the dollar as foreign investment slows and capital begins to move elsewhere.
Rather than predicting a sharp collapse, Hatzius describes the dollar’s outlook as a slow, steady grind downward. The US Dollar Index (DXY) is already down about 10% this year—something Goldman believes could be the start of a longer trend.
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