The dollar will decline to $1.55 per euro in a year, analysts led by Thomas Stolper in London wrote in a note to clients. It will trade at 86 yen in 12 months, from an earlier forecast of 90 yen, according to the report. The greenback bought 81.87 yen today.
"For the dollar to stabilize or even to rally, investors need to be convinced of the case for additional long-term investments in the U.S.," the Goldman analysts wrote. "With unemployment still high, fiscal consolidation looming and continued weakness in the real estate sector, the growth outlook remains less compelling in the U.S. than in many other regions or countries."
Fed Chairman Ben S. Bernanke said at his first news conference in April that the economy still requires monetary support. Policy makers have kept their target for overnight lending in a range of zero to 0.25 percent since December 2008 to sustain the expansion. Central bank rates are 1.25 percent in Europe, 1 percent in Canada, 0.5 percent in the U.K. and 4.75 percent in Australia.
The U.S. economy will grow 2.76 percent this year, compared with 1.63 percent in Europe and 9.59 percent in China, according to the International Monetary Fund in Washington.
U.S. unemployment has been more than 8 percent since February 2009. President Barack Obama and lawmakers are debating how to cut spending, raising concern the economy will suffer as government support wanes.
'Affordable' Prices
The dollar has been able to maintain its buying power, Carlson wrote in his report.
"In my travels around the globe, I have seen that despite some recent inflation, prices for everything from goods to gasoline to hotel rooms remain affordable for people in the U.S."
The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, has narrowed to 2.32 percentage points from 2.67 percentage points in April.
Last month's figure was the most in three years. The average over the past decade is 2.10 percentage points.