US dollar volatility may have settled down in recent weeks, but analysts at Goldman Sachs Group Inc. see plenty of reasons to think it may start trading as a “riskier” currency again.
Analysts Karen Reichgott Fishman and Lexi Kanter list elevated policy uncertainty related to trade tariffs and Federal Reserve independence, fiscal fears and diversification away from US assets as potential triggers.
A steep slide in the dollar this year triggered by President Donald Trump's threats to impose harsh levies against global trading partners has fueled speculation about a permanent shift in the dollar's status as a safe-haven asset. While the Goldman analysts don't predict that will happen, things could still be pretty bumpy in the short term.
“Shifting correlations have left dollar strength in periods of risk-off a less reliable outcome,” the analysts wrote in a note published July 9.
One of the most “striking” developments of 2025 has been the dollar's increased tendency to sell off alongside US equities, the analysts said. The dynamic has occurred more than twice as often so far this year as over the prior 10 years, they said.
The “more concerning sign of reduced US asset appeal” — when equities, Treasuries and the dollar all fall together — has also been more common, according to the note.
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