Dollar Roadblock From Fed’s Balance Sheet Sets Up Euro Rally

It doesn’t look good for the dollar. Morgan Stanley sees a glut looming, while Standard Chartered Plc says the growing U.S. monetary base will undercut the greenback.

There’s a rising tide of supply as the Federal Reserve pumps dollars into bank-funding markets in the wake of September’s upheaval. That has the potential to dent the yield advantage that U.S. markets offer just as a change of management at the European Central Bank could draw a line under monetary easing in the euro’s home region.