Goldman Sachs 2026 Outlook: Dollar Overvalued by 15%, Tech 'Exceptionalism' is Key Risk

Goldman Sachs has issued a pivotal warning in its 2026 Global Foreign Exchange Outlook. While the US Dollar's hegemony remains intact for now, the bank's proprietary GSDEER model indicates the Greenback is currently overvalued by approximately 15%.

The “Tech Exceptionalism” Risk

The primary threat to the Dollar is structural capital market risk—specifically, the potential bursting of the US technology and AI asset bubble. Current valuations have been heavily subsidized by global capital rushing into US equities.

Goldman warns of a specific tail risk: if a “DeepSeek 2.0” moment challenges US tech giants, or if AI returns fail to materialize, global capital flows could reverse, triggering severe Dollar depreciation.

G10 Divergence: Short GBP, Long EUR

• Euro (EUR): Trading near “fair value,” expected to see moderate upside driven by Dollar weakness rather than economic dynamism.
• British Pound (GBP): The “laggard” of Europe and most structurally overvalued currency in the G10.
• Key Trade: Goldman recommends shorting GBP, anticipating three 25bps cuts by the Bank of England by year-end 2026.

Asian Currencies: The Tech Trade

In Asia, preference is given to low-yielding currencies integrated into the semiconductor supply chain. Favorites include the Korean Won (KRW) and Taiwan Dollar (TWD).

• The Korean Won is projected to benefit from $50 billion in potential inflows and inclusion in the FTSE World Government Bond Index (WGBI) in 2026.