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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 35 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 35 institutional desks. No promotion.
Morgan Stanley's recent outlook posits that the U.S. dollar is entering a long-term bear market, projecting the EUR/USD to reach 1.27 by the end of 2027. This perspective stands in stark contrast to current market sentiments, which generally anticipate a stronger dollar in the near term as global economic conditions evolve.
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.
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.
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.
How firms align with this view
Aligned with the desk view
Key takeaways
Market implications
If Morgan Stanley's projections materialize, financial markets may witness a fundamental shift in forex trading strategies, focusing on currency weakening rather than strength. This could lead to increased volatility and shifts in demand for U.S. dollar-denominated assets and impact international trade dynamics.
Risks to this view
The main risks to Morgan Stanley's view include unexpected U.S. economic resilience, aggressive Fed policy adjustments, or geopolitical events that bolster the dollar. Additionally, a faster-than-expected resolution to inflation pressures could also undermine their bearish stance.
| Firm | Stance | YE 2026 |
|---|---|---|
Scotiabank | Bearish | 1.1200 |
Bank of America | Bearish | 1.1200 |
ANZ | Bearish | 1.1400 |
All 30 desk targets for EUR/USD
How we cover this story
US inflation data and geopolitical risk-off sentiment remain primary drivers of EUR/USD directionality; USD strength likely persists absent dovish Fed signals.
Market repricing of Fed rate expectations narrows USD support, allowing EUR/USD to consolidate higher near-term resistance levels.
EUR/USD break above 1.1565 would signal completion of recovery structure and shift bias toward further upside; key chart resistance for positioning.
EUR/USD spot at 1.1558 sits just 0.21% below the 30-firm Dec-26 consensus of 1.1583, masking a 0.20-wide dispersion range.
Spot EUR/USD at 1.1530 sits just 0.45% below the 30-firm Dec-26 median of 1.1583, masking a 0.20-point dispersion from Citi's 1.10 to Deutsche Bank's 1.30.
EUR/USD spot sits at 1.1551, just 0.28% below the 30-firm Dec-26 median of 1.1583, but a 0.20-wide dispersion band signals deep disagreement beneath the surface.
30 investment banks see EUR/USD at 1.1654 by Dec 2026
View the live EUR/USD forecastING |
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Lloyds |
Citi |