Dollar: Weak Data Keeps Downside Risks Elevated - TD Securities

Strategists at TD Securities note in their latest view that the dollar has re-entered a bearish pattern. The key factor triggering this shift was a Treasury buyback announcement that pushed the dollar index below its 200-day simple moving average, a significant technical level. At the time of writing, the dollar index is trading near 99.07, with the market closely watching subsequent economic data for further directional cues.

**Technical Breakdown Reinforces Bearish Signal**

A break below the 200-day simple moving average is widely viewed by the market as a key technical signal of trend weakening. TD Securities strategists believe this breakdown confirms the dollar's bearish bias. Although previous positioning data suggested the dollar could remain range-bound, the loss of key technical support makes market sentiment more susceptible to negative economic data shocks, thereby intensifying downside pressure.

**Weak Data May Fuel Moderate Softness**

Looking ahead to upcoming key employment data, TD Securities strategists expect the dollar could see moderate weakness if nonfarm payrolls or the unemployment rate disappoint. This suggests that under the current bearish tone, any negative fundamental news could be amplified, though strategists also believe downside space is relatively limited in the near term. According to market reports, the firm holds a less bearish stance on the dollar in the short term but forecasts dollar weakness in 2026 due to asymmetric risks.

**Safe-Haven Sentiment vs. Data Dynamics**

Notably, the dollar has also seen brief support from safe-haven demand, briefly reclaiming the 99.00 level. However, TD Securities' analytical framework shows a tug-of-war between the bearish pattern from the technical breakdown and data-driven short-term safe-haven buying. If subsequent economic data remains weak, technical bearish forces could take the upper hand, keeping the dollar index under pressure.