EUR/USD: Morgan Stanley remains focused on the euro, expects downward pressure on the pair towards parity

Morgan Stanley expects the euro to be subject to downward pressure on the short-term forex:

"We remain focused on the EUR. We expect the euro to remain under pressure from sellers, as the risks related to politics explain only part of the currency's weakness. It seems that in today's globally uneven environment, divergences in euro area growth and inflation will be even more evident. A single monetary policy and the lack of fiscal flexibility suggest that monetary and financial conditions within Europe should diverge, pushing nominal GDP growth differentials higher.

EUR yields will likely remain low for a longer time, lowering the currency's price on the forex.

We continue to target 0.97 on the EUR/USD by the end of the year."