TD Securities sticks with bearish dollar view despite stronger US data

TD Securities forex strategists are holding firm on their bearish dollar view for 2026, pushing back against a growing market narrative that stronger US economic data and the Iran conflict have shifted the currency's trajectory.

In a note to clients, the bank's forex team acknowledged that US data momentum has turned positive relative to the European Union and China. However, they argued this amounts to only middling performance when measured against the broader rest-of-world universe. The strategists also pointed to a Federal Reserve on hold and expected rate convergence with major peers as key reasons to maintain their negative dollar stance.

For currency traders, this divergence between market pricing and TD's view highlights the importance of monitoring real-rate differentials and central bank policy paths. The dollar's recent strength may prove short-lived if the Fed remains patient while other central banks begin easing. Traders can track the latest dollar index and major pair quotes on NowPrice's real-time forex pages to gauge market reactions.

Looking ahead, the key catalyst will be whether US data continues to surprise to the upside, forcing a reassessment of Fed policy expectations. The Iran conflict adds geopolitical uncertainty, but TD sees it as insufficient to alter the fundamental dollar outlook. Focus now shifts to upcoming US inflation and employment reports for confirmation of the bank's view.