Morgan Stanley and BofA’s 2024 EUR/USD Predictions

  • Morgan Stanley recommends selling EUR/USD, banking on sustained US economic strength and expected rate cuts in the eurozone, Sweden, and the UK.
  • Bank of America suggests shorting USD, especially against the Euro and South African Rand, anticipating increased appeal of euro-based investments with falling interest rates in the eurozone.

Morgan Stanley has released what they call their top trade for 2024, and it is the exact opposite of Bank of America’s call. 

Analysts at Morgan Stanley think selling EUR/USD around the current level of 1.10 is the trade to make next year, with a target for the pair reaching parity by the end of the first quarter of 2024. This outlook relies on sustained economic performance of the US. They also believe that technical recessions in the eurozone, Sweden, and the UK are expected to lead their respective central banks to initiate rate cuts in the second quarter of 2024. Selling Swedish krone (which has become a top ten traded currency recently) and the British pound might also be options for 2024 too, but this was not explicitly stated by the bank. 

On the other hand, Bank of America has suggested that shorting the USD is the trade to make, particularly against the Euro and South African Rand. BofA sees the potential falling interest rate in the eurozone increasing the attractiveness of euro-based stocks and other investments. 

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