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2025-12-16 09:37:27
[ECB Decision and Non-Farm Payrolls Preview: Morgan Stanley Bullish on Euro, Long-Term Target 1.30 if ECB Does Not Refute Rate Hike Expectations] 1. Morgan Stanley believes that if European Central Bank (ECB) President Christine Lagarde avoids explicitly opposing market expectations of higher interest rates at this week's policy meeting, and US non-farm payroll data is weak, the euro will face significant upside risks. Weak US employment data will further strengthen expectations of continued easing by the Federal Reserve, thus putting downward pressure on the US dollar. 2. From a technical analysis perspective, the euro is expected to break through key resistance levels. If it can hold above 1.1920, it will open the door to 1.20, a level not reached since the early recovery phase after the pandemic. Broader dollar weakness could drive the euro further up, even if the ECB may cut rates later. 3. In the medium term, Morgan Stanley is relatively optimistic about the euro. Although the baseline scenario still expects the ECB to cut rates by 50 basis points, the euro can still appreciate if US interest rate trends, risk premiums, and global capital flows are favorable to the euro. 4. In a more optimistic scenario, if US interest rate expectations continue to adjust, the dollar risk premium declines, and European economic growth stabilizes, the euro could rise to 1.30 in the long term. Currently, strategists believe the downside risks for the euro are relatively limited, while its upside potential is greater. 5. Note: US October non-farm payroll data will be released at 21:30 Beijing time today, and the European Central Bank's policy decision will be announced on Thursday.
