After the Fed's big rate cut, Goldman Sachs is bearish on the US dollar, but Deutsche Bank is calling for a Trump victory to boost a strong dollar

Goldman Sachs, a banking giant, recently predicted that the US dollar will continue to weaken after the Federal Reserve's interest rate reversal. The bank stated that the recent 50 basis point rate cut by the Federal Reserve indicates its willingness to actively address potential economic downturns, implying that the expectation of the dollar being relatively weak against other major currencies such as the euro, pound, and yen is reasonable.

Goldman Sachs currently forecasts that the euro and pound against the dollar will rise, with the euro/dollar expected to increase by 2.67% and the pound/dollar by 4.47%. Goldman Sachs strategists also stated, "Over time, this balance should lead to a weaker dollar, but we still expect this to be a gradual and uneven process. We also still believe that the overvaluation of the dollar will not be eroded quickly or easily, but the threshold has been lowered a bit."

The pound is supported by its risk beta coefficient, robust growth momentum, and the Bank of England's determination to cut interest rates. The market has already digested the risks of a US economic recession, which is favorable for risk assets, the pound, and other pro-cyclical currencies.

Goldman Sachs' call for a weaker dollar is different from the forecast of Deutsche Bank, a banking giant in Germany. Deutsche Bank believes that President Donald Trump's term will ultimately drive the dollar to appreciate against other currencies, as the market underestimates the positive risks of a Trump victory on the dollar, and remains optimistic about a strong dollar