Goldman Sachs: Global Currency Markets Stabilize Around US Dollar Levels After Ceasefire

Goldman Sachs said global foreign exchange markets entered a phase of relative stability in the value of the U.S. dollar following the announcement of a ceasefire linked to the recent Iran-related crisis, with the currency showing little meaningful movement either since the escalation began or since the start of the year.

In a new report, analysts at the investment bank said fluctuations in the dollar during the crisis remained broadly consistent with its traditional relationship to commodities and risk-sensitive assets, reinforcing what the bank described as the currency’s “expected behavior” during periods of geopolitical uncertainty.

According to the report, the overall stability in the dollar also suggests there are currently no strong new incentives pushing global markets toward a faster pace of “de-dollarization” in international trade and financial transactions.

While the dollar has remained comparatively calm, Goldman Sachs highlighted deeper structural shifts taking place across foreign exchange markets, particularly in emerging economies.

The bank noted that carry trade strategies in emerging markets have continued generating strong overall returns, especially against lower-yielding currencies such as the euro and the Swedish krona, as investors seek higher returns amid diverging global interest-rate environments.

Goldman Sachs also pointed to sharp moves in neighboring-country currency pairs, including the Norwegian krone against the Swedish krona and the Australian dollar against the New Zealand dollar, reflecting widening trade and economic differences between closely linked economies. According to the report, several of these currency spreads have reached their highest levels in years.

Meanwhile, the bank said the Japanese yen remains deeply undervalued despite intermittent interventions aimed at supporting the currency.

Analysts at Goldman Sachs argued that a sustained recovery in the yen is unlikely unless global recession fears intensify significantly or the Bank of Japan adopts a materially tighter monetary policy stance.

The report underscores how currency markets are increasingly being shaped not only by geopolitical developments, but also by diverging growth outlooks, monetary policy expectations, and shifting trade competitiveness across major economies.