Morgan Stanley now neutral on USD but still likes USD/JPY higher

Morgan Stanley:

• "We turn neutral on the USD after having remained bullish for the last six months, though we still see risk/reward as biased marginally to the upside given rising real yields and so we maintain our long USD/JPY exposure,"
• "Despite hawkish Fed statements, robust data, and higher real yields, the DXY has failed to rally and EUR/USD has even turned higher. Positioning appears long USD, and history suggests USD strength ceases once the Fed actually begins hiking rates, which may be soon "

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