Morgan Stanley drops weak-dollar view, sees strength lasting through mid-2027

Morgan Stanley has withdrawn its previous weak-dollar outlook and now expects dollar strength to continue through mid-2027, BlockBeats reported. The bank expects the U.S. Dollar Index to rise to 104 from around 101, while the euro-dollar exchange rate falls to $1.10 from about $1.14. Morgan Stanley said expectations for additional Federal Reserve rate hikes, a resilient U.S. economy and elevated energy prices would support the U.S. rate advantage. It expects 25-basis-point hikes in December and March, followed by the benchmark rate holding at 4.25%-4.5% through the end of 2027. Morgan Stanley added that high U.S. Treasury yields are weighing on global risk appetite, while Europe’s political uncertainty, including France’s 2027 presidential election, could further weaken the euro and strengthen the dollar.