**Goldman Sachs: The U.S. Dollar Enters a New Phase of Weakness, Euro Set to Strengthen**

In a recent report that’s catching the market’s attention, Goldman Sachs suggests that the U.S. dollar is entering a new depreciation cycle—one that’s likely to persist, rather than being a short-lived trend.

The report highlights signs of a cooling U.S. economy, as reflected in the latest non-farm payroll data, and sees this as a key driver behind the recent weakness in the dollar. Leading the research, strategist Kamakshya Trivedi and his team have revised their euro forecasts higher, now expecting:

– EUR/USD to reach 1.17 in 3 months (up from 1.12)
– 1.20 in 6 months (up from 1.15)
– 1.25 in 12 months (up from 1.20)

Two main factors are behind this shift: slowing U.S. economic momentum and a broader change in global investor behavior, particularly in how international capital is being allocated.

The report points out that institutional investors are starting to diversify away from U.S. assets as their relative attractiveness declines. This aligns closely with the changing sentiment seen across global markets.

Importantly, Goldman Sachs isn’t alone in this view. A recent industry survey shows that 68% of financial professionals expect the dollar to continue weakening at least through the first half of 2026, with 40% expecting the trend to extend into 2027.

What does this mean for the broader market? Analysts suggest that pressure from investors seeking higher risk premiums on U.S. assets is more likely to show up in the exchange rate, rather than in sharp corrections in asset prices themselves.

For investors, this signals a clear need to review currency exposure. If Goldman’s forecast plays out, and the euro hits 1.25 within the next 12 months, there could be significant upside for those holding euro-denominated assets.

Goldman’s report is sure to influence how global investors read the market going forward—and it’s a timely reminder for all of us to reassess the risks and opportunities in our foreign currency holdings.