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Goldman Sachs warns that USD is entering a long term downtrend.
Goldman Sachs believes that the weakening of the USD has only just begun and could last for many years. Chief economist Jan Hatzius stated that the USD is depreciating even though the American economy has stabilized since April, indicating that long-term structural factors are at play.
He emphasized that USD is still being overvalued and America is still maintaining a large current account deficit of 1.100 trillion USD, needing foreign capital to compensate. However, concerns about the independence of the Fed and institutional risks could lead to foreign capital withdrawal, putting pressure on USD.
The DXY index has currently decreased by about 10% since the beginning of the year.