TD Securities' macro team, led by Jayati Bharadwaj, asserts that the recent weakness in the US Dollar following the July FOMC meeting is a short-lived retracement within a broader uptrend expected to persist through Q3 2026 [1]. The team highlights that the July FOMC featured three hawkish dissents in favor of a rate hike, which they believe underpins continued Dollar strength [1].
According to TD Securities, hawkish speeches from Federal Reserve dissenters and centrist members leaning hawkish are likely to support the Dollar and offset some of the post-FOMC weakness [1]. Their MRSI model is gradually turning more bearish but does not yet indicate a structural downtrend for the USD [1].
The analysts suggest that unless there is significant weakness in US economic data that would prompt the Fed to consider an extended rate hold, the broad US Dollar uptrend for Q3 2026 remains intact [1]. They recommend strategies such as shorting out-of-money EUR/USD calls for the summer to position for near-term Dollar consolidation or a resumption of the uptrend [1].
TD Securities concludes that they would only consider chasing the Dollar lower if sufficient evidence emerges in US data to sway the rest of the Fed committee toward a prolonged pause in rate hikes [1].
CONCLUSION
TD Securities maintains a positive outlook on the US Dollar, viewing recent weakness as temporary and expecting the uptrend to continue through Q3 2026. The firm sees hawkish Fed commentary and the absence of significant US data weakness as key supports for the Dollar in the near term.