Morgan Stanley has turned bullish on the US dollar. Currently, it is expected that the exchange rate of the US dollar against the euro will rise by about 3% by mid-2027, driven by rising US interest rates and strong economic growth. The Morgan Stanley FX Strategy Team, led by David Adams, wrote in a report: “We originally thought the US dollar would continue to weaken in the second half of 2026, but we were wrong. We now predict that the dollar will continue to be strong until the end of the year and through 2027 as interest spreads widening between the US dollar and the rest of the world, strong growth in the US economy, and a rise in European risk premiums boosting the dollar.” The US investment bank expects the EUR/USD exchange rate to fall to 1.10 in the middle of next year. The previous forecast was 1.16; at the same time, the bank lowered its forecast for the euro exchange rate at the end of this year from 1.20 to 1.12. However, the bank remains tactically neutral against the US dollar on the grounds that “there is a risk that the negative risk premium of the US dollar will rise due to policy drivers, which may make the euro and yen safer financing currencies for arbitrage transactions.”

Morgan Stanley has turned bullish on the US dollar. Currently, it is expected that the exchange rate of the US dollar against the euro will rise by about 3% by mid-2027, driven by rising US interest rates and strong economic growth. The Morgan Stanley FX Strategy Team, led by David Adams, wrote in a report: “We originally thought the US dollar would continue to weaken in the second half of 2026, but we were wrong. We now predict that the dollar will continue to be strong until the end of the year and through 2027 as interest spreads widening between the US dollar and the rest of the world, strong growth in the US economy, and a rise in European risk premiums boosting the dollar.” The US investment bank expects the EUR/USD exchange rate to fall to 1.10 in the middle of next year. The previous forecast was 1.16; at the same time, the bank lowered its forecast for the euro exchange rate at the end of this year from 1.20 to 1.12. However, the bank remains tactically neutral against the US dollar on the grounds that “there is a risk that the negative risk premium of the US dollar will rise due to policy drivers, which may make the euro and yen safer financing currencies for arbitrage transactions.”