TD Securities reports that US Dollar bullishness is fading as Fed rate hike expectations peak, despite the currency maintaining a top ranking in their internal scorecard.
TD Securities suggests that the US Dollar faces limited upside potential because market expectations for Federal Reserve hawkishness have likely peaked. While the firm acknowledges the resilience of the US economy and labor market, they do not view these conditions as signs of overheating, leading them to delay their projected rate hike timelines to late 2026 and early 2027.
TD Securities has pushed their expectations for Fed rate hikes to December 2026 and March 2027.
The upside is limited because market expectations for hawkish Fed policy have peaked, and current economic data is not signaling an overheating economy.
TD Securities analysts suggest the US Dollar faces limited upside potential as market expectations for Federal Reserve rate hikes reach a plateau. While the US economy and labor market remain resilient, the firm has pushed its rate hike projections to late 2026 and early 2027, signaling a shift in the currency's momentum.
The firm believes that market expectations for Federal Reserve rate hikes have peaked and that the US economy, while resilient, is not overheating enough to drive further persistent dollar gains.