EUR/USD: Morgan Stanley's forecast for this week

Like every week, Morgan Stanley presents below its weekly forecasts for the euro and the dollar for the week starting 9 May 2016:

EUR: neutral bias

"We believe that the euro will outperform emerging currencies and high yield currencies linked to commodities while the dollar rises because of the inability of the ECB to combat global disinflationary forces. In this environment, the decline in inflation expectations increases the real rate as nominal rates are very difficult to push down. We believe that the euro should remain negatively impacted by future policy developments, the Brexit being the most urgent concern."

USD: bullish bias

"We expect a bullish USD correction in the coming weeks; The markets have begun to realise the cost of a weak USD, which resulted in the equity markets and commodities to react negatively to the weak USD. Technically, the USD has developed a key reversal pattern, supporting our bullish view in the short term. "