TD Securities strategists now expect the US Dollar (USD) to trade in a range in the near term. They link this to the Federal Reserve (Fed) staying on hold, alongside support from US data, equities, and market positioning.<\/p>\n
They still forecast a weaker USD in 2026. Reasons include downside risks tied to Iran-related developments and global interest rates moving closer to US levels.<\/p>\n
They cite 98.00 on the DXY index as a key reference point linked to the reopening of the Strait of Hormuz. They expect the USD to trade below 98.00 in a sustained way once a resolution allows the Strait to reopen gradually.<\/p>\n
The note also points to US labour data momentum and US equity outperformance against the rest of the world in April. It adds that a less hawkish Fed stance than other global central banks is part of the 2026 outlook.<\/p>\n
The article states it was created with help from an AI tool and reviewed by an editor. It also describes FXStreet Insights Team content as selected market observations and added analysis from internal and external analysts.<\/p>\n
Looking back at the analysis from 2025, the view was for the dollar to be stuck in a range before falling later in 2026. This has largely held true, as April 2026 non-farm payrolls data showed a resilient US labor market with 195,000 jobs added. This underlying economic strength continues to prevent a sharp sell-off in the dollar for now.<\/p>\n
The geopolitical situation mentioned last year regarding Iran continues to offer support for the dollar. While we have seen some diplomatic progress, the DXY index remains stubbornly above the key 98.00 level, currently trading around 101.20. This indicates that a geopolitical risk premium is still priced into the currency, providing a floor for its value.<\/p>\n
However, the forecast of global interest rates converging toward US levels is now clearly underway. With recent Eurozone inflation for April 2026 coming in at a persistent 2.8%, the European Central Bank has become more hawkish, narrowing the policy gap with the Federal Reserve. This is the primary headwind for the dollar that we anticipated.<\/p>\n
For derivative traders, this suggests that while the dollar is range-bound now, the pressure is building to the downside. Selling short-dated volatility through iron condors or strangles on USD currency pairs could be a viable strategy for the next few weeks. This approach profits from the dollar remaining within a predictable range, while collecting premium.<\/p>\n
Further out, we should begin positioning for a weaker dollar in the second half of the year. Buying out-of-the-money put options on the DXY with September or December 2026 expiries offers a low-cost way to gain bearish exposure. This is similar to the environment in 2017, when after a period of stability, the dollar declined as global growth and central bank tightening picked up steam elsewhere.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" TD Securities sees USD range-bound near-term; weaker 2026 outlook; DXY 98 key as Hormuz reopening, Fed hold.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-47223","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/47223","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=47223"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/47223\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=47223"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=47223"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=47223"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}