2026 Outlooks: Market and Economic Forecasts - Morgan Stanley

What the desk is arguing

Morgan Stanley's 2026 outlook emphasizes the critical interplay between macroeconomic variables and the FX landscape. The firm highlights that sustained economic growth coupled with central bank policies will be central in determining future exchange rates.

Moreover, Morgan Stanley's analysis is anchored in the potential shifts in inflation rates, interest rates, and fiscal policies across major economies, which could lead to significant fluctuations in currency values by 2026. In rejecting a static view, they imply a caution against complacency in market participants who may underestimate volatility driven by external shocks.

Where it sits in our coverage

Our consensus target for the EUR/USD pair stands at 1.075, indicating a cautious but optimistic view on Euro strength aligned with expected economic recovery in the Eurozone. This aligns with Morgan Stanley’s outlook, as they point towards a favorable economic environment aiding Euro appreciation over the coming years.

• Barclays: Target of 1.08 for Dec-26.
• JPMorgan: Target of 1.10 for Dec-26.
• Goldman Sachs: Target of 1.06 for Dec-26.

How other firms see it

Other major firms present varying perspectives on the 2026 outlook. UBS foresees potential currency interventions impacting currency values, which contrasts with Morgan Stanley's assumptions.

• BoFA: Suggests a target of 1.04, reflecting a more pessimistic view on Euro resilience.
• Deutsche Bank: Maintains a target aligned with current consensus, reinforcing the outlook for Euro stability against the dollar over the next few years.