AlphaTON stock soars 200% after pioneering digital asset oncology initiative
Investing.com -- The dollar’s safe-haven appeal has faded hard since President Donald Trump returned to the White House, with the greenback now marked down double digits. Morgan Stanley is bracing investors for even more pain ahead, warning that policy uncertainty and shifting global flows will keep the pressure on.
The dollar index was up 0.5% on Tuesday to 98.31, but down about 11% since Trump took office. Further pain is likely ahead, with Morgan Stanley forecasting the greenback to slump to 91 but mid-2026.
“Policy uncertainty will likely drive foreign investors to up their FX-hedging ratios, putting pressure on the dollar,” Morgan Stanley said in a recent note. Despite strong flows into U.S. assets and booming demand for Treasurys, the bank warns that rising risk premiums, a coming convergence in U.S. interest rates with peers, and renewed debate over the dollar’s status as the globe’s safety trade will cap any rebound in the months ahead.
Markets may feel “exuberant, although maybe not entirely irrational yet," with investors betting on positive shifts in growth, but the overall call is one of caution. Morgan Stanley highlights that “whether and how much risk premiums should be attached to US assets remains a debate reflected in cross-asset correlations,” as the risk-on mood obscures a more fundamental shift in market dynamics.
With the dollar’s best days behind it for now, attention turns to tactical positioning and protection as the U.S. currency enters the final stretch of 2025 facing a wall of skepticism.
The DXY "remains under pressure, falling to 91 by mid-2026, thanks to both a convergence in US rates and growth to peers and a further rise in risk premium due to increasing FXhedging flows and investor focus on USD’s safe-haven status," Morgan Stanley warned.