Eben@CANSLIM ResearchGoldman Sachs sees the Dollar’s near-term risks skewed to the downside into next week’s FOMC decision, arguing the Fed’s high bar to tighten has left the currency responding to data in an “EM-like” fashion. In a note dated 11 September 2026, the bank’s FX strategy team favours a tactical long Japanese Yen but would fund it out of EUR rather than USD, and flags NZD and CAD as the clearest positive systematic signals while GBP, USD and AUD screen weakest.
Key Takeaways
- Goldman Sachs attributes recent Dollar weakness to three factors: an uncertain Fed reaction function, the Treasury’s preference to curtail higher yields, and idiosyncratic policies supporting undervalued Asian currencies.
- The bank expects next week’s FOMC decision to be pivotal for the Dollar, with policy-related risks skewed to the downside even though an eventual hike should be Dollar-positive.
- Goldman Sachs sees a case for being tactically long JPY, but prefers funding via short EUR/JPY rather than short USD/JPY given higher energy prices and the likelihood of a September Fed hike.
- On EUR/HUF, Goldman Sachs expects local catalysts — an inflation target revision, a Euro adoption plan and the 2027 budget — plus Q4 EU fund disbursement to act as Forint tailwinds, offset by rising European natural gas prices.
- Goldman Sachs estimates the Rand is undervalued by 9% versus the Dollar on a 60:40 average of its GSDEER and GSFEER models, but calls ZAR tactically unattractive at current spot levels.
Lead Analysis: What Goldman Sachs’ “The Walk After the Talk” Says About the Dollar
In a report titled “Global FX Trader: The Walk After the Talk,” Goldman Sachs analysts Kamakshya Trivedi, Michael Cahill, Danny Suwanapruti, Teresa Alves, Karen Reichgott Fishman, Stuart Jenkins, Victor Engel and Lexi Kanter argue that the Dollar’s recent depreciation rests on three drivers: a more uncertain Fed reaction function and the perception that the FOMC faces a high bar to tightening, the Treasury’s revealed preference to curtail higher yields, and idiosyncratic policies supporting some of the world’s most undervalued currencies, particularly in Asia.
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