Dollar Hits Half-Century Low, Goldman Warns: Next Drop May Hit Thursday!

Since the start of the year, the dollar has shown clear weakness, with the dollar index dropping about 10%, marking its worst half-year performance since 1973.

Goldman warns that Thursday’s U.S. June nonfarm payrolls report could trigger further declines, with eased geopolitical risks and fading U.S. fiscal/tariff “noise” acting as catalysts for a weaker dollar.

Nonfarm Report Could Ignite Dollar Decline

The U.S. will release May nonfarm employment data a day early on Thursday due to the public holiday on Friday. Goldman suggests that a report showing a more pronounced labor market deterioration could reinforce the Fed’s dovish stance, weakening the dollar—especially against the euro and yen.

President Trump has repeatedly urged Fed Chair Powell to cut rates further. Most Fed officials, including Powell, have emphasized monitoring economic data to assess tariff impacts on inflation and growth, with Thursday’s nonfarm report being a key focus.

A disappointing jobs report could sway more Fed officials toward earlier rate cuts.

Meanwhile, the Bank of Japan is expected to continue raising rates, widening the interest rate gap with the dollar, per Goldman.

Even if the nonfarm report doesn’t show clear labor weakness, Goldman predicts a gradual dollar decline, supporting emerging market arbitrage strategies, strengthening the yuan, and creating spillover effects in Asian forex.

Goldman also notes that recent easing of Middle East tensions has reduced the dollar’s safe-haven appeal, while domestic risks—like Trump’s proposed reciprocal tariffs—seem less urgent, dampening investor caution.