US Dollar: Equity weakness could trigger more losses - TD Securities

FXStreetOct 20, 2026 11:21 AM

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TD Securities strategists argue the Dollar’s recent rally has peaked, with US Dollar Index (DXY) slipping below 102.00 as stretched positioning and consolidating yields cap upside. They see only gradual weakness, expecting a relief USD selloff after US midterm elections, with US versus global equities remaining a key driver.

USD peak, gradual consolidation ahead

"After a month of relentless rally, the USD shows signs of topping."

"Despite upside US inflation data surprise, the USD rally over the past month has become exhausted and started to reverse course, with the market also pricing out odds of October Fed rate hike."

"While the USD has likely discovered a top, we do not see sufficient catalysts for an immediate selloff for the USD."

"A relief selloff after the US midterm election is more likely, in our view, coinciding with year-end bearish USD seasonality and the current 3m DXY risk reversals stance in the options market."

"A sustained USD selloff will likely require either the US equity market's relative underperformance vs RoW, or clarity around an end for the Fed rate hikes, in our view."

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

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