Morgan Stanley Sounds the Alarm: Dollar’s Bull Run Is on Borrowed Time

The dollar's dominance is looking shaky—and Wall Street's finally noticing.

Morgan Stanley just dropped a bombshell: the greenback's multi-year rally might be running on fumes. No surprise here—crypto natives have been hedging against fiat fragility for years.

Why Traders Are Eyeing Exits

When legacy banks start doubting the almighty dollar, you know the macro winds are shifting. No hard numbers? Doesn't matter. The writing's been on the blockchain.

DeFi's Silent Victory Lap

While traditional finance plays catch-up, decentralized stablecoins are quietly eating the dollar's lunch. Another reminder that 'safe haven' assets aren't what they used to be—unless you count Bitcoin's 200-week moving average.

Funny how these warnings always come *after* the smart money's already repositioned. Welcome to the party, Wall Street.

Euro Strength Rises as Dollar Bull Run Nears Collapse

Structural Shift in Currency Markets

James Lord, Morgan Stanley’s Chief Global FX Strategist, outlined the firm’s contrarian Morgan Stanley dollar forecast at the year’s beginning, and the consensus was expecting continued US exceptionalism following Trump’s election. However, Morgan Stanley anticipated different outcomes based on their analysis.

Lord stated:

The falling US dollar trend is being driven by immigration restrictions, lack of fiscal stimulus, and also trade tariff implementation. Lord emphasized that the US faces a 4 percent GDP current account deficit in a slowing growth environment, which makes continued dollar strength increasingly difficult to sustain right now.

Federal Reserve Policy Accelerates Decline

The Morgan Stanley dollar forecast has already exceeded initial targets, and this has prompted the firm to extend projections in their midyear outlook. Lord noted they may even reach their bull case target of euro-dollar at 1.30, marking a significant shift from the previous dollar bull run dynamics.

Lord explained:

At the time of writing, Morgan Stanley US economics research expects the Fed to cut rates to 2.5 percent, which will further pressure the falling US dollar. This dovish pivot actually represents a dramatic departure from previous monetary policy and continues to undermine the dollar bull run that dominated markets for over a decade.

European Market Impact

Marina Zavolock, Morgan Stanley’s Chief European Equity Strategist, has analyzed how the falling US dollar affects European equities, and her research reveals that more than half of the European index faces negative exposure to euro strength. Only about 30 percent benefits from these currency movements right now.

Zavolock stated:

The sectors benefiting from this shift include utilities, real estate, and banks, which have strongly outperformed as the Morgan Stanley dollar forecast materializes. Companies with advanced hedging programs demonstrate better performance along with lower volatility compared to those without proper FX risk management.

Zavolock emphasized the importance of currency-adjusted metrics:

This highlights how the end of the dollar bull run creates opportunities for European companies when measured in dollar terms, even as local currency performance appears weaker due to translation effects from the strengthening euro and other currencies.