Morgan Stanley: Long-Term Dollar Bear Market, End 2027 EUR/USD Forecast 1.27 - Exchange Rates Org UK

What the desk is arguing

Morgan Stanley's forecast for a long-term bear market for the dollar is significant, especially with an end target of 1.27 for EUR/USD by 2027. This suggests a sustained weakening of the dollar against major currencies as macroeconomic factors, including inflation and interest rate policies, play out over the coming years.

The firm’s analysis suggests that structural changes in the U.S. economy and shifting monetary policies will facilitate this depreciation. Implicitly, they challenge the prevailing view among several analysts who see the dollar maintaining strength due to resilient economic data and hawkish Federal Reserve actions in the near term.

Where it sits in our coverage

Currently, the consensus target for EUR/USD is positioned at 1.2200 by December 2026, which reflects a relatively cautious outlook compared to Morgan Stanley’s long-term projection. The per-firm spread shows a range where most firms anticipate slight appreciation rather than the drastic appreciation forecasted by Morgan Stanley.

• JPMorgan: Dec26 target 1.2000
• Goldman: Dec26 target 1.2500
• Barclays: Dec26 target 1.2100

How other firms see it

Several firms are aligned with a more stable outlook for the dollar, contrasting Morgan Stanley's bearish position. These firms are banking on economic fundamentals supporting the U.S. dollar in the short to medium term.

• Goldman: Anticipates EUR/USD reaching 1.2500 by December 2026, suggesting stronger dollar support.
• JPMorgan: Projects a target consistent with moderate dollar strength at 1.2000 for December 2026.
• Barclays: Forecasts 1.2100 for the same time frame, indicating a more balanced view against dollar weakness.