Dollar Trends | Goldman Sachs: Dollar Strength Will Weaken If Iran War Impacts Economic Growth

SighingCashier · 2026-03-25T03:31:06+00:00

Goldman Sachs noted that if market focus on the Iran war shifts toward economic growth risks, the US dollar may weaken its gains. Under growth concerns, the yen and Swiss franc will appreciate, while emerging market currency outlook deteriorates, with ongoing war continuing to impact growth in Europe and Asia.

SighingCashier

2026-03-25 03:31:06

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[Iran Situation/Inflation/US Dollar] The ongoing Middle East conflict continues, and Goldman Sachs foreign exchange strategists say that if the focus of the FX and interest rate markets shifts from inflation concerns caused by the Iran war to worries about economic growth, the dollar’s rally since the conflict began could slow down.

Goldman Sachs points out that although the market has largely viewed the oil price shock as an inflation and trade condition event, if attention shifts to greater downside growth risks, the broad rally of the US dollar against G10 currencies is likely to weaken.

The firm states that in a scenario where growth concerns lead to a tightening of financial conditions dominated by the stock market, the Japanese yen and Swiss franc, as safe-haven currencies, will appreciate the most against the dollar, while the outlook for emerging market currencies will significantly worsen.

Goldman Sachs believes that a prolonged war will harm growth prospects and exchange rate outlooks in Europe and Asia. Although inflation risks may still decline, this outcome will become more difficult to achieve as the conflict duration extends.

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