Morgan Stanley Research maintains a neutral bias on the USD Index (DXY) in the near-term.

"We remain neutral on the DXY overall, but we see risks as decidedly skewed to the downside after two slower-than expected price prints in June: CPI and PPI," MS notes.

"The slowdown in US price pressures represents a downside risk to the  ~29bp of Fed hikes priced through December 2026 (and therefore to the USD), since by September we expect broad  disinflationary pressures to be increasingly evident in the incoming data – notwithstanding any potential energy price  effects from geopolitical turbulence," MS adds.