[Morgan Stanley: Fed Rate Cuts May Drive Yen to Appreciate Nearly 10% in the Coming Months] Morgan Stanley strategists stated that if the Federal Reserve implements consecutive rate cuts due to a slowdown in the U.S. economy, the yen could appreciate nearly 10% against the dollar in the coming months. The strategists pointed out that USD/JPY has deviated from its fair value, and if it returns to fair value, the USD/JPY exchange rate will decline in the first quarter of 2026, as falling U.S. Treasury yields may suppress fair value. Meanwhile, Japan's fiscal policy is not particularly expansionary. Morgan Stanley expects USD/JPY to drop to around 140 in the first quarter of 2026, then rebound to around 147 by the end of the year. They also anticipate that the U.S. economy will recover in the second half of next year, with a resurgence in carry trade demand potentially putting renewed pressure on the yen.