Morgan Stanley, J.P. Morgan, TD Securities, and Credit Agricole are challenging the long-standing Wall Street consensus that the dollar will stay strong. These major banks forecast dollar weakness extending into 2026, driven by moderating US inflation and lowered rate hike expectations.

Morgan Stanley expects the dollar to weaken through the second half of 2026, with potential recovery by 2027. TD Securities projects a 3-6% USD depreciation against major currencies, citing global economic resilience and anticipated Federal Reserve easing. Credit Agricore sees EUR/USD hitting 1.14 by Q4 2025 before retreating to 1.10 in 2026.

This represents a significant shift from the previous dollar bull case built on US economic outperformance and higher Fed rates attracting capital flows. The divergence reflects growing confidence that the gap between the US and other economies is narrowing, with J.P. Morgan pointing to softening US labor markets as support for their bearish stance.

For crypto investors, a weaker dollar historically correlates with increased risk-taking and rising digital asset prices. Morgan Stanley estimates long-term crypto returns around 6% annually but with 55% volatility, suggesting diversification benefits as dollar purchasing power erodes.