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Trader, analyst and instructor with a 6-year experience

Morgan Stanley: 2015 EUR/USD outlook

Morgan Stanley plans selling EUR/USD in a long-term, targeting 1.1200 by the end of the year 2015.

Here are the rationales behind the forecast:

1) EUR remains at risk from global deflationary pressure, given the relative openness of the euro zone's economy and high debt levels.

2) Euro zone's growth outlook will also stay subdued, keeping market expectations for further ECB easing elevated.

3) However, analysts believe that the ECB policy measures taken already will be enough to keep EUR under pressure over the coming year.

4) Portfolio outflows and EUR being used as a funding currency are consistent with a longer-term structural decline.

However MS analysts warn: "Risks to our bearish EUR view could come from central banks globally expanding their currency reserves, leading to renewed allocation into EUR".

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