Australia pounded England's bowlers to score 342 for nine off their 50 overs and dismissed Morgan's team for 231 off 41.5 overs to lay down their marker for the World Cup over the next six weeks.
England surprised by preferring Gary Ballance ahead of Ravi Bopara and using Chris Woakes as the third paceman ahead of Steven Finn, who took a hat-trick among his five for 71.
"We're not a precious squad. We changed the balance of the side but we played our best 11," Morgan insisted.
"Batting five or six is probably his best position. And Gary Ballance has had a fantastic 12 months of Test match cricket batting at three and has looked in magnificent touch since he's been here."
Once again Morgan was out for a duck -- his fourth in five innings -- but said he was confident of turning things around in the tournament.
"I hit the toe end, the ball probably held up a bit on the pitch. It's not ideal getting out getting nought, but no (not worried)," the skipper said.
Morgan said while England was again outplayed by Australia, he said the target remained reaching the quarter-finals.
"It's not a big challenge. We said the first two games in the tournament would be the toughest in our group and to come out of them with results would give us huge confidence," he said.
"And we're still at that stage. We're still focusing on getting to the quarter-finals and developing the further we get into the tournament.
"Certainly the first port of call is to turn to senior players and ask them to lead from the front.
"I think every game the senior players should lead from the front especially when you're playing against a side who have been on a bit of a run."
Morgan defended the team's strategies, but said the execution of the plans had been lacking.
"I'm hoping there'll be a higher level of skill produced. I think the strategies are pretty solid as are everybody's," he said.
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