US Dollar: Rally seen stretched into year-end – TD Securities

FXStreetSep 30, 2026 9:28 AM

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TD Securities’ TD Macro Research Insight argues the US Dollar rally is stretched against major currencies and is unlikely to break to new highs in current Fed hiking cycle. Month-end equity rebalancing flows, weaker-than-consensus US payrolls, and broadly short G10 FX positioning versus USD support a bearish Dollar regime, with risks from a potential US diesel export ban and geopolitical escalation.

TD sees USD in bearish regime

"Headlines of potential US diesel exports ban and surprisingly strong US PMI data prolonged the post-FOMC USD rally last week."

"Comparing FX-adjusted global equity index returns, our month-end rebalancing framework sees a 1.0-1.5 z-score rebalancing flow out of the USD and into EUR, GBP, and CAD."

"Our US payrolls forecast for September is weaker-than-consensus both on UE rate and headline jobs growth."

"Our trend-following framework suggests the USD rally has become stretched vs EUR, GBP, CAD, SEK and MXN."

"We do not see the USD breaking out to a new high in the current Fed rate hiking cycle unless the Fed can out-hawk global central banks like in 2022, or RoW growth outlook starts to falter ahead of the US."

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

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