[Morgan Stanley: Turning Bullish on the Dollar, High Yields Will Continue to Squeeze Global Risk Appetite] BlockBeats News, September 26, Morgan Stanley has revised its previous bearish stance on the dollar, now expecting the dollar's strength to continue until mid-2027. The bank forecasts the Dollar Index to rise to 104 by then, while the euro-to-dollar exchange rate may decline from the current approximately $1.14 to $1.10. The report suggests that expectations of further Federal Reserve rate hikes, the resilience of the U.S. economy, and persistently high energy prices will maintain the relative advantage of U.S. interest rates and continue to support the dollar. This assessment aligns closely with the recent market environment. On September 25, the 10-year U.S. Treasury yield remained at a high level of about 5.2%, and the Dollar Index fluctuated around 101. Although U.S. stocks stabilized in early trading, supported by optimism around AI, and Bitcoin hovered around $84,900, high yields continued to suppress the valuation space for risk assets. Morgan Stanley had previously adjusted its Federal Reserve outlook to include 25 basis point rate hikes in December of this year and March 2027, raising the federal funds rate range to 4.25%-4.5%, with the possibility of maintaining this level through 2027. For the foreign exchange market, this implies that the interest rate differential between the U.S. and other major economies will be slow to narrow. The report also highlights European political risks as an additional source of pressure on the euro, including the French presidential election in spring 2027, as well as election risks in Germany and Italy. If the euro's risk premium continues to rise, it will, along with the U.S. interest rate advantage, further boost the dollar.