The dollar’s recent gains may reverse as narrowing interest-rate differentials and slowing growth weigh on the currency, according to Morgan Stanley. The greenback rose about 2% since the Iran conflict began, supported by safe-haven demand and energy dynamics, while the euro and yen weakened. Strategists led by David Adams at Morgan Stanley said the rally is “more likely to be a ‘bull trap’ — a head fake where price action lures in investors, only to suddenly reverse,” adding markets have “under

The dollar’s recent gains may reverse as narrowing interest-rate differentials and slowing growth weigh on the currency, according to Morgan Stanley. The greenback rose about 2% since the Iran conflict began, supported by safe-haven demand and energy dynamics, while the euro and yen weakened. Strategists led by David Adams at Morgan Stanley said the rally is “more likely to be a ‘bull trap’ — a head fake where price action lures in investors, only to suddenly reverse,” adding markets have “underpriced the growth-negative impact.” The firm expects the Federal Reserve to cut rates twice this year, while the European Central Bank may raise rates to counter inflation.