[Morgan Stanley: Dollar to Weaken Due to Narrowing US-Europe Yield Spread and Economic Growth Suppression from Iran War] Reported by Golden Finance, on March 26, Morgan Stanley stated that as the yield spread between the US and Europe gradually narrows and the Iran war suppresses economic growth, the dollar exchange rate will weaken. The dollar, which has been strengthening since the US-Israel joint attack on Iran on February 28, is benefiting from its safe-haven attributes and its status as the currency of the world's largest energy producer. The index measuring the dollar's performance against a basket of currencies has risen 2% since the conflict began and hit its highest level since December last year on Monday. Meanwhile, the euro and yen have both fallen by more than 2% during the conflict, as these two economies are highly dependent on energy supplies from the Middle East. Morgan Stanley believes the Federal Reserve may overlook "temporary inflation shocks" and focus on growth, predicting two rate cuts this year. In Europe, strategists expect the European Central Bank to raise interest rates by 50 basis points "to address inflation." They stated: "Whether in absolute terms or relative to market pricing, interest rate trends are likely to be unfavorable for the dollar." Morgan Stanley's view aligns with Citadel Securities, which earlier this week noted that investors are beginning to shift their focus from the initial inflation shock to its impact on global economic growth.