(Bloomberg) -- While the US dollar typically strengthens when a recession is looming, all bets are off once it hits.

That’s according to Goldman Sachs Group Inc. strategists including Zach Pandl, co-head of global FX and EM strategy, who cited historical data showing a more mixed performance for the greenback during an economic contraction.

Investors have pivoted to the greenback this year as a go-to haven, with Bloomberg’s dollar index swelling for each of the last six weeks and hitting a two-year high last Thursday. However, with Bloomberg economists ramping up the probability of a recession this year to 30%, that dollar strength could soon be threatened. 

A historical guide is the period from 1999 to 2001, when the U.S. economy mirrored current conditions of falling growth stock valuations, an active Federal Reserve and a rich dollar. Right now, the US dollar is currently “highly overvalued” by around 18%, according to the bank.

As Goldman sees it, there are two possible outcomes for the currency in coming weeks: if the global growth outlook improves, it will weaken as investors veer to riskier assets; if the world economy does enter a recession, the dollar’s path is murky. 

In the former case, the dollar should be shorted against most currencies, with the bank particularly favoring commodity exporters like the Canadian dollar. In the latter, the Japanese yen will likely outperform the dollar as it usually does well during recessions. The analysts forecast an increase of as much as 20% for the yen if a recession strikes. 

“The dollar’s performance in and around recessions is less clear-cut than for other assets -- it depends on the exact timing of events across regions, how US asset markets fare compared to others, etc.,” Pandl and others wrote. 

To be sure, whether the U.S. will sink into recession is a matter of debate on Wall Street. Goldman’s Senior Chairman Lloyd Blankfein said on CBS’s “Face the Nation” on Sunday it’s a “very, very high risk.” 

Yet Goldman’s Senior Credit Strategist Amanda Lynam told Bloomberg TV’s Surveillance Monday the firm’s economists are not pricing in a recession this year as their base case, though she discussed scenarios involving economic slowdown. 

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