Morgan Stanley turns bullish USD, expecting strength to continue through mid-2027 year

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Morgan Stanley: Turning Bullish USD, high yields will continue to weigh on global risk appetite

BlockBeats news,September 26, Morgan Stanley has revised its previous bearish USD view, expecting USD strength to continue through mid-2027 year. The bank forecasts that the USD index will rise to 104，EUR against USD may fall from the current level of approximately 1.14 USD to 1.10 USD. The report said that expectations of further Federal Reserve rate hikes, the resilience of the U.S. economy, and persistently high energy prices will all maintain the relative advantage of U.S. interest rates and continue to support USD.

This view is highly consistent with recent market conditions.September 25, the U.S. Treasury 10-year yield remained at approximately 5.2%at elevated levels, while the USD index fluctuated around 101; although U.S. stocks stabilized at the open, supported by AI optimistic sentiment, Bitcoin also hovered around 84900 USD, but high yields continued to constrain the valuation space for risk assets.

Morgan Stanley had previously revised its Federal Reserve path to December and 2027 year March each, taking the federal funds target range to 25, and it may remain at this level in 4.25% -4.5%year. For the foreign exchange market, this means that the interest-rate differential advantage between the United States and other major economies will be difficult to narrow quickly.

The report also identified European political risk as an additional source of pressure on 2027 including EUR year's French presidential election in the spring, as well as election risks in Germany and Italy. 2027 risk premia, if they continue to rise, will jointly push up EUR alongside the U.S. interest-rate advantage.

Original link USD https://m.theblockbeats.info/flash/369090

Key points

Morgan Stanley expects USD strength to continue through mid-2027 year.
The report forecasts that the USD index will reach 104，EUR against USD may fall from approximately 1.14 USD to 1.10 USD。
The report said that expectations of further Federal Reserve rate hikes, the resilience of the U.S. economy, and persistently high energy prices will support USD。
September 25, the U.S. Treasury 10-year yield is approximately 5.2%，USD index fluctuates around 101, while Bitcoin is approximately 84900 USD。
Morgan Stanley previously revised the Federal Reserve path, expecting December and 2027 year March each, taking the federal funds target range to 25 basis points, and the federal funds target range will rise to 4.25% -4.5%。

AI-assisted interpretation

The following is analysis, separate from reported facts. Verify important claims independently.

Relative interest-rate advantage means that U.S. interest-rate expectations are higher than those of other major economies; the report said this will support USD; high yields, meanwhile, will constrain the valuation space for risk assets.

Why it matters to readers

USD、EUR and global risk assets may be simultaneously affected by the U.S. interest-rate advantage, high yields, and European political risks.

This means that USD a stronger and higher bond yields may increase valuation pressure on stocks and crypto assets.

Risks and unknowns

USD The rise in the 104 index to EUR and USD the fall to 1.10 USD are forecasts and have not yet occurred.
Whether the Federal Reserve will subsequently raise rates by the amounts stated in the report in 2026 year December and 2027 year March each, remains uncertain. 25 basis points
It is unclear from the evidence whether U.S. economic resilience, energy prices, and European political risks will persist.

Morgan Stanley turns bullish USD, expecting strength to continue through mid-2027 year

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