US Dollar: Data weakness keeps downside risks elevated - TD Securities
TD Securities strategists argue that the US Dollar (USD) has re-entered a bearish regime after the Treasury buyback announcement pushed the US Dollar Index (DXY) below its 200‑day SMA.
TD Securities strategists suggest the US Dollar (USD) has entered a bearish phase following Treasury's recent announcement to double liquidity support buyback operations for 10-year to 20-year and 20-year to 30-year sectors. The USD has slipped below its 200-day Simple Moving Average, highlighting a renewed bearish momentum in the currency.
Weaker US economic data, rising credibility of US institutions, and potential financial repression risks have all contributed to the bearish sentiment. Additionally, Jackson Hole communication risks further exacerbate downside risks for the USD. With recent US data releases failing to deliver upside surprises and the near-term expectation of Fed rate hikes, there's ample room for the USD to depreciate.
As per the strategists, USD positioning has shifted from long to short, and the downtrend is expected to persist with only some exceptions like USD/CAD.
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