Fed turns dovish, Morgan Stanley adjusts dollar forecast to neutral
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©Shutterstock Morgan Stanley updated its outlook on the U.S. dollar to a neutral stance, a significant shift from its previous forecast that the U.S. dollar spot index would rise 8% in the second quarter of this year. The adjustment is in response to the recent dovish stance of the Federal Reserve and the resulting decline in Treasury yields.
The bank’s U.S. dollar spot index edged down 0.2%, leading it to reassess its currency strategy. Morgan Stanley strategists are now advising clients to stay away from short Eurodollar positions due to changing economic conditions.
Instead, they recommend shorting EUR/JPY to prepare for potential currency swings in the current market environment. This guide presents strategic pivots for Forex trading, aligned with the latest economic indicators and central bank policy direction.
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