Morgan Stanley forecasts the US dollar could drop about 9% by mid-2026, reaching levels last seen during the Covid-19 pandemic, due to expected Fed rate cuts and slowing US growth. Strategists, including Matthew Hornbach, note that sustained trends in rates and currencies will likely push the dollar lower and steepen yield curves. The US Dollar Index has already declined nearly 10% from its February peak, with further weakness expected. Safe-haven currencies like the euro, yen, and Swiss franc are set to benefit, with the euro possibly rising to 1.25 against the dollar by mid-2026. This shift signals increased currency volatility and new opportunities in non-dollar assets for investors and corporates
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