Morgan Stanley updates expectations for US dollar decline
Financial institution analysts stated that they were wrong in their predictions of the weakening of the American currency and renewed their strategies.
Morgan Stanley analysts announced that they have made a strategic shift in their views, stating that they were wrong in their expectations that the decline in the US dollar would continue.
Reasons for the Expectation Change
In a note published by David Adams and other analysts, it was explicitly acknowledged that the previous downside forecast was erroneous.
The Federal Reserve's hawkish stance and the strong performance of US interest rates compared to other countries played a decisive role in this shift of view.
Parity and Index Forecasts
According to the latest evaluations, the increasing political risk premium working against the euro also played a decisive role in the decision.
Morgan Stanley now forecasts that the euro-dollar exchange rate will drop to the 1.10 level and the dollar index will rise to 104 by the middle of next year.