EUR/USD: Morgan Stanley's weekly forecast for the euro and dollar for this week (pair likely to fall)

Like every week, Morgan Stanley gives its weekly forecasts and reports on the euro and the dollar:

EUR: Short positions will make their return, bearish bias

"With the diminishing Greek uncertainty, we believe investors will feel more comfortable to initiate new short positions on the EUR. Rebounds of the single currency should therefore be used as selling opportunities. Draghi also stated that the ECB stands ready to act if needed, which could be enough to weigh on the EUR, especially if the ECB's policy supports equities, given the current inverse relationship between the euro and European stock exchanges."

USD: The attention turns to the Fed, bullish bias

"With the risks from Greece and China on the decline, we believe investors will again focus on the theme of higher Fed rates. Right now, a rate hike of 0.25% in early 2016 is fully integrated into prices, but economists still expect a rate hike in December 2015. This assumes a margin for the adjustment of short-term rates, which should drag the USD up in its wake."