US Dollar: Q3 uptrend seen intact – TD Securities

TD Securities’ macro team, led by Jayati Bharadwaj and colleagues, argues that recent Dollar weakness after the July FOMC is a short-lived retracement within a broader Q3 2026 USD uptrend. They see hawkish Fed dissenter speeches and centrist members leaning hawkish as supporting the Dollar, with their MRSI model gradually turning more bearish but not yet signaling a structural USD downtrend.

Retracement within broader Dollar strength

"Post-FOMC USD selloff is likely short-lived. The July FOMC saw three hawkish dissents in favor of a rate hike."

"We view the latest USD move more as a temporary retracement rather than the formation of a new USD downtrend. Hawkish speeches from the Fed dissenters should offset some of the post-FOMC USD weakness."

"Hawkish pushback from other Fed members in the coming weeks will likely curb the USD weakness. We see scope shorting out-of-money EUR/USD calls for the summer to position for near-term USD consolidation or uptrend resumption."

"In the absence of material US data weakness to remove the near-term Fed rate hike pricing, the broad USD Q3 2026 uptrends remain intact."

"We see the move more like a short-term retracement than a formation of a new USD downtrend. We would prefer to chase the USD lower when sufficient evidence shows up in US data to sway rest of the Fed committee toward an extended rate hold."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)