Morgan Stanley Forecasts Significant Decline for Euro
Morgan Stanley forecasts that the euro will decline to parity with the dollar, anticipating a decrease of at least 7% in value in the coming months. Read Full Article at RT.com
TroibNews 
Morgan Stanley forecasts that the euro will likely fall to near parity with the US dollar in the coming months, pointing to increasing political risks and economic fragility.
The investment bank predicts that the European single currency will weaken to 1.02 against the US dollar by the end of the year, a decline of approximately 7% from its current value, according to David Adams, Morgan Stanley's head of Group-of-10 foreign-exchange strategy, in remarks cited by Bloomberg.
Adams explained that the expected decline is related to the European Central Bank's (ECB) likely approach to interest rates, with significant reductions anticipated at the next three meetings, including a potential half-point decrease.
“There is plenty of scope for the market to refocus on the fact that the ECB could be cutting deeper and faster than what is currently priced,” stated Adams. “This week’s meeting could prove an important catalyst for the market to start thinking about that.”
This projection is regarded as the most bearish among the currency analysts surveyed by the news agency, with most analysts predicting that the euro will climb to $1.11 by the end of 2024. This comes as the market's focus shifts to the ECB's imminent rate decision.
Meanwhile, the ECB is anticipated to opt for a quarter-point reduction in interest rates, which would mark the second cut in the current cycle, as the regional economy faces challenges in sustaining growth.
“Political risk premia and uncertainty are rising at a time when economic growth is slowing,” Adams noted. “Both of those factors suggest investors would be less willing to deploy capital in the region.”
Frederick R Cook for TROIB News
The investment bank predicts that the European single currency will weaken to 1.02 against the US dollar by the end of the year, a decline of approximately 7% from its current value, according to David Adams, Morgan Stanley's head of Group-of-10 foreign-exchange strategy, in remarks cited by Bloomberg.
Adams explained that the expected decline is related to the European Central Bank's (ECB) likely approach to interest rates, with significant reductions anticipated at the next three meetings, including a potential half-point decrease.
“There is plenty of scope for the market to refocus on the fact that the ECB could be cutting deeper and faster than what is currently priced,” stated Adams. “This week’s meeting could prove an important catalyst for the market to start thinking about that.”
This projection is regarded as the most bearish among the currency analysts surveyed by the news agency, with most analysts predicting that the euro will climb to $1.11 by the end of 2024. This comes as the market's focus shifts to the ECB's imminent rate decision.
Meanwhile, the ECB is anticipated to opt for a quarter-point reduction in interest rates, which would mark the second cut in the current cycle, as the regional economy faces challenges in sustaining growth.
“Political risk premia and uncertainty are rising at a time when economic growth is slowing,” Adams noted. “Both of those factors suggest investors would be less willing to deploy capital in the region.”
Frederick R Cook for TROIB News
