US Dollar Uptrend Remains Intact Amid Temporary Weakness

According to TD Securities' macro team, led by Jayati Bharadwaj and colleagues, the recent weakness in the US Dollar after the July FOMC meeting is a short-lived retracement within a broader Q3 2026 USD uptrend. They argue that hawkish Fed dissenter speeches and centrist members leaning hawkish are supporting the Dollar.

The team's MRSI model has gradually turned more bearish, but not yet signaling a structural USD downtrend. The July FOMC saw three hawkish dissents in favor of a rate hike, which suggests that the recent Dollar weakness is likely temporary.

Bharadwaj and her colleagues believe that hawkish speeches from the Fed dissenters will offset some of the post-FOMC USD weakness. Additionally, they expect hawkish pushback from other Fed members in the coming weeks to curb the USD weakness.

In the absence of material US data weakness, the broad USD Q3 2026 uptrends remain intact. The team suggests that investors may want to short out-of-money EUR/USD calls for the summer to position for near-term USD consolidation or uptrend resumption.