Morgan Stanley has released a report forecasting that the USD will sink to levels seen during the COVID-19 pandemic by mid-2026 due to rate cuts and slowing economic growth, with the US Dollar Index expected to dive by around 9% to 91.Trade disputes are heaping pressure on the USD, exacerbating its recent downtrend. While interest rates and currency markets have begun to show sustained significant momentum, a nosedive in the USD, coupled with a steepening of the yield curve, is foreseeable.Related NewsSpot USD/CNY Sinks 37 bps to Close at 7.1953In Morgan Stanley's estimates, the biggest beneficiaries of a weak USD will be the EUR, JPY and CHF. It anticipated that EUR/ USD would rise from its current level of around 1.13 to around 1.25 next year. Benefiting from arbitrage activities and lower trade tension risks in the UK, GBP/ USD could rise from 1.35 to 1.45. USD/ JPY might also strengthen from about 143 to 130.