Morelos was left out of the Rangers squad for the second leg of the play-offs.
Rangers boss Giovanni van Bronckhorst had concerns about the strikers' fitness levels and attitude over the first few weeks of the season.
Senior players in the squad unanimously supported the decision, according to Sky Sports.
Morelos was sent off for 13 minutes after coming on as a substitute at Easter Road on Saturday.
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Talks over a new deal for the player are currently on hold, but it is believed he still has a future at the club.
Rangers have strengthened in the forwards with the addition of Tom Lawrence, Rabbi Matondo, and Antonio Colak this summer.
In his last five matches, Colak has scored four goals and started all seven matches.
Sky Sports has a reporter named Sahil Jaidka.
Giovanni van Bronckhorst would rather not be in this position on the eve of a big game.
The dropping of a player who has scored 114 goals and contributed 51 assists shows real leadership.
Concerns about Morelos' attitude and fitness levels were raised by Sky Sports pundit Kris Boyd before the draw at Hibs and it's clear those issues have cost him his place in the squad.
The red card at Easter Road was branded as stupid by James Tavernier and with the captain, along with other senior players, backing Van Bronckhorst's call, it's clear there is unity over the standard needed within the dressing room.
If Morelos can prove he is willing to put the team ahead of his own interests, there is a chance he will stay at Ibrox.
Antonio Colak has shown he knows his way to goal, so while there is depth at Rangers, Morelos could have a key role to play.
The manager has made it clear that the ball is in Morelos' court and that time will tell if those issues around fitness and attitude are dealt with by the player.
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