Morgan Stanley's latest report suggests a bearish outlook for the U.S. Dollar Index (DXY) as the Federal Reserve is expected to cut rates in March 2025. The bank's economists anticipate a decline in the 12-month core PCE inflation rate, which could prompt the Fed to reduce rates by 25 basis points. "Falling rates are an important USD-negative catalyst," Morgan Stanley analysts assert, recommending selling the USD against the euro, British pound, and Japanese yen. The report also highlights that the current market pricing already reflects expectations of a rate cut, suggesting limited upside for the dollar. Additionally, the strategists advise buying 5-year U.S. Treasuries and selling 10-year TIPS breakevens, as they foresee a continued disinflation trend and a potential decline in Treasury yields.