Dollar Spot Index Rises Over 2% in March, Undermining Goldman Sachs Call
Goldman Sachs and Deutsche Bank entered 2026 forecasting a weaker US dollar as Fed rate cuts loomed, but the dollar spot index climbed over 2% in March, its best performance since July. Middle East tensions fueled energy-price spikes and haven flows that reversed bearish bets and forced GS strategists to adjust currency projections.
1. Dollar Rally Surpasses 2% Gain
In March the dollar spot index rose over 2%, its strongest monthly advance since July, reversing a four-month slide. Speculators flipped to long positions as bearish bets were liquidated.
2. Goldman Sachs’ Forecast Shortfall
Goldman Sachs and Deutsche Bank began the year predicting US currency weakness on expectations of three Fed rate cuts. The unexpected rally has forced GS strategists to revisit their earlier projections.
3. Middle East Tensions and Energy Prices
Escalating conflict in the Middle East drove oil prices higher, triggering safe-haven demand for the dollar. Elevated energy costs pressured speculators who had bet on a weaker currency.
4. Future Outlook and GS Response
With short-dollar positions unwound, GS expects market focus to shift to growth risks from sustained high energy prices. Strategists now forecast the euro may test $1.12 by year-end if current trends persist.