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- Morgan Stanley Research argues that the USD is likely to return to structural weakness over the coming year.
- "Back to regime 1, USD weakness: Falling real yields and (modestly) wider breakevens should bring us back to regime 1, last observed in 2Q-4Q20," MS notes.
- "This regime sees widespread USD weakness, though the magnitude will be a function of: 1) How quickly inflation falls; 2) How much global growth rebounds; and 3) How quickly central banks unwind tightening," MS adds.
