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05:58 PMConflict keeps midstream compelling, integrateds see a pipeline of cash 04:38 PMIn Focus: Equity & Credit Update on AI CapEx 12:24 AMBarclays warns yen recovery likely temporary despite Tokyo's $35bn intervention 10:33 PMUS Rates - I won’t see you next time 08:06 PMGlobal Commodities: It’s Simple Math 05:22 PMGlobal FX: Yen intervention, re-assessing USD bearish view, central bank rundown 09:05 PMMorgan Stanley delays Fed cut call to 2027 (more info). Middle East risk drives dollar 09:02 PMEM Fixed Income: To every thing there is a season 11:51 AMTiff Macklem: Release of the Monetary Policy Report 09:05 AMChristina Papaconstantinou: Central banks and independence - a test for democracy 05:58 PMConflict keeps midstream compelling, integrateds see a pipeline of cash 04:38 PMIn Focus: Equity & Credit Update on AI CapEx 12:24 AMBarclays warns yen recovery likely temporary despite Tokyo's $35bn intervention 10:33 PMUS Rates - I won’t see you next time 08:06 PMGlobal Commodities: It’s Simple Math 05:22 PMGlobal FX: Yen intervention, re-assessing USD bearish view, central bank rundown 09:05 PMMorgan Stanley delays Fed cut call to 2027 (more info). Middle East risk drives dollar 09:02 PMEM Fixed Income: To every thing there is a season 11:51 AMTiff Macklem: Release of the Monetary Policy Report 09:05 AMChristina Papaconstantinou: Central banks and independence - a test for democracy

Morgan Stanley

2026 FX Outlook: The Year of Pivots

LIVE20 November 2025USD bearish

Overview Forecasts Trades Currencies Scenarios Technicals Volatility EM Strategy Macro Quant

FX Research · Year-End 2026

20 November 2025USD bearish

David Adams · Matthew Hornbach

ACCURACY · 2023–2024

63.3%Hit rate

521 bpsAvg error

43.3%Direction

#3 of 8Rank

Sample: 30 forecasts·See methodology·View coverage: 2026 FX Outlook: The Year of Pivots

ACCURACY · 2023–2024

Performance Snapshot

On Track

Off Track

Forecasts

Active Trades

+21.0%

Total P&L

0.0%

Avg Progress

DXY

100.2

Target: 99

EUR/USD

1.15

Target: 1.16

USD/JPY

157

Target: 140

USD Bias

BEARISH

DXY Forecast Path

Target 99

USD Sensitivity Analysis

US twin deficits

Twin deficit widens by 1%pt of GDP

-1.5 to 2% on USD TWI

BOJ normalization

BoJ hikes to 0.75% by end-2026

USD/JPY falls 8-12%

European fiscal expansion

Germany delivers 2%pt fiscal stimulus

EUR/USD +3-5%

Fed cutting cycle

Fed cuts 100bp in H1

-3 to 4% on DXY

Global risk appetite

VIX sustained below 14

High-beta FX rallies 5-8% vs USD

Top Currency Pairs

8 pairs

Pair	Direction	Status	Spot	Live	Dec 26	vs Spot	vs Live
TRY	Sell TRY	--	42.45	--	52	-18.4%	--
GBP	Buy GBP	--	1.31	--	1.47	+12.2%	--
HUF	Buy HUF	--	332	--	295	+11.1%	--
AUD	Buy AUD	--	0.64	--	0.71	+10.9%	--
JPY	Buy JPY	--	157	--	140	+10.8%	--
PLN	Buy PLN	--	3.67	--	3.3	+10.1%	--
ZAR	Buy ZAR	--	17.31	--	15.75	+9.0%	--
NZD	Buy NZD	--	0.56	--	0.61	+8.9%	--

Explore Report Sections

Forecasts

Exchange rate targets across G10 & EM

Trades

Active trade ideas with P&L tracking

Currencies

Deep-dive views per currency pair

Scenarios

Macro scenario analysis & stress tests

Technicals

Chart patterns, support & resistance

Volatility

FX volatility surface & carry

EM Strategy

Emerging market FX & rates

Macro Quant

Quantitative signals & models

Macro Trade Themes

USD Bear Regime

Short USD in first half of 2026

Broad USD weakness driven by Fed cutting cycle, twin deficit concerns, and global growth rotation. DXY expected to trough near 94 by Q2. Prefer expressing via EUR/USD longs and USD/JPY shorts. Close USD shorts in Q3 as US growth re-accelerates.

Sterling Outperformance

GBP is our top G10 pick for 2026

UK growth resilience, attractive carry, and fiscal credibility post-budget make GBP the standout performer in 2026. Cable to reach 1.47 by Q4. EUR/GBP to decline as UK outperforms eurozone. BoE gradual easing pace supports sterling yield advantage.

Yen Normalization

Long JPY on BoJ rate hikes

BoJ to normalize policy rate to 0.75% by year-end 2026. Narrowing rate differentials and reduced carry appeal drive USD/JPY to 140. Real yield convergence between Japan and US accelerates. Intervention risk adds asymmetric downside for USD/JPY above 155.

Swiss Franc Fade

CHF weakening as Europe grows

Swiss franc safe-haven premium to erode as European growth broadens and risk appetite improves. SNB accommodative stance and REER overvaluation support CHF weakness. EUR/CHF to rise. Use CHF as funder for carry trades across G10.

H2 Dollar Recovery

Tactical USD longs in Q3-Q4

US growth re-acceleration in H2, combined with Fed pause and relative outperformance, drives partial DXY recovery from 94 to 99. Tactical USD longs vs EUR and commodity currencies. The V-shape in DXY is our highest conviction call for 2026.

Compare with Other Firms

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FX BANK FORECAST · COVERAGE

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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from eight institutional desks. No promotion.