Morgan Stanley strategists stated in a report that the US dollar may weaken in the coming months if risk appetite improves.

They stated that, against the backdrop of strong U.S. corporate earnings boosting the stock market, positive risk appetite has room to push the dollar lower. However, they noted that this view is premised on the upcoming U.S. data not being so weak as to trigger earnings downgrades, nor so strong as to reignite discussions about Federal Reserve rate hikes. Otherwise, they said, the dollar would likely benefit from a narrowing yield spread between the Federal Reserve and the European Central Bank. The DXY Dollar Index was flat at 97.903, and Morgan Stanley expects the index to reach 95.000.