It’s not hard to make the bull case for the dollar.

We’re currently witnessing one of more pronounced periods of US economic exceptionalism in recent memory and that’s translating into so-called “TINA” flows to US assets, particularly equities, which are also benefiting from inexhaustible interest in America’s monopolistic tech mega-caps which are at the forefront of the AI revolution.

At the same time, the never-say-die resilience of the US economy means the Fed’s unlikely to cut as deeply or as quickly as its peers around the world, and that too is dollar-positive. Then there’s tariffs.

Small wonder “long dollar” was back on the most crowded trades list in the latest installment of BofA’s global fund manager survey, along with the Magnificent 7 (perennial top-spot holder) and gold.

Note that “long dollar” garnered a larger share of the vote — and “long gold” a smaller share — in responses gathered post-election versus those tallied in the days leading up to the vote.

So, any old idiot (i.e., fund manager) can make a long dollar case. But can you make a short dollar case? Morgan Stanley can.

It’s “time to sell the USD – at least tactically,” strategists including David Adams wrote, in a new note, describing the setup for the greenback as “increasingly negative,” a least in the near-term.

Part of the rationale just revolves around the idea that a lot of the dollar-positive news is already in the price, and as such positioning’s perhaps too one-sided.

The figures give you a sense of things. Again: This still looks like a one-way bet, notwithstanding some evidence it’s off the boil.

Although Morgan Stanley agrees that the US economy’s likely to remain exceptional for the foreseeable future, the bank suggested economic surprise indices might’ve topped for now.

“ESIs often seem to ‘mean revert’,” Adams and co. wrote, adding that “investors have largely internalized the ‘US outperformance’ narrative.”

The bank also suggested the trade risk premium for the greenback may have peaked for now, and said market participants “might be overestimating the speed, breadth and magnitude of trade policy changes.”

Finally, the bank argued markets are perhaps too convinced of the monetary policy divergence story. “Investors are too skeptical of the Fed’s willingness and ability to keep cutting rates,” the same note said. “At the same time, markets are pricing too much cutting abroad, particularly in Europe.”

Many in the market — and particularly dollar bulls — expect the December FOMC meeting to emphasize the resilience of the US economy, and thereby to convey a cautious approach to further rate cuts with an inclination to pause in Q1 2025. Morgan Stanley, by contrast, expects cuts at every policy meeting through May.

It’s worth noting, I suppose, that “Tariff Man” doesn’t love a strong dollar when he’s trying to fight a trade war.