Goldman Sachs has raised its forecasts for the dollar's exchange rate against major global currencies, according to Bloomberg.

The dollar is expected to strengthen due to the robust U.S. economy and tariffs raised by Donald Trump, which may slow down the easing of monetary policy.

This is reported by writes Bloomberg.

“We anticipate that the dollar will rise by about 5% over the next year amid the introduction of new tariffs and continued outpacing growth in the U.S.,” states a note from Goldman Sachs.

Strategists do not rule out the possibility of a more significant strengthening of the dollar. This marks Goldman’s second upward adjustment regarding the dollar in approximately two months, supported by consistently strong U.S. growth and the planned tariff increases by Donald Trump, which risk igniting inflation and disrupting the easing of Federal Reserve policy.

Optimism regarding the dollar seems to be gaining momentum following the report on a sharp increase in employment on January 10, which bolstered the perception of a resilient labor market, enhancing the currency's prospects against peers, from the euro to the Australian dollar.

Goldman Sachs now expects the euro to fall below parity to 0.97 against the dollar within six months. This level was last seen in 2022 after Russia’s invasion of Ukraine triggered an energy crisis in Europe and raised concerns about a slowdown. Previously, the bank had forecasted a rate of 1.05.

Even with the recent rate hike, Goldman strategists see risks for further dollar strengthening in the future. This may be partly due to maintaining economic resilience despite higher tariffs and a more destructive impact on rate-sensitive economies.

“While we acknowledge that currency market participants clearly expect some changes in tariff policy, and it is difficult to isolate the driving factors behind recent moves, we believe that even more strengthening of the dollar lies ahead,” they wrote.