Here’s Why TD Securities Says the Dollar Could Still Drop

A Fifth Straight Hold Is the Base Case

CME FedWatch data puts the odds of the Federal Reserve holding rates steady at Wednesday’s meeting between 95% and 98%, Bitcoin.com News reported yesterday. That would mark the fifth consecutive meeting the central bank has left its benchmark unchanged since Warsh was sworn in as Fed chair in May, succeeding Jerome Powell.

Bitcoin has already priced in some of the uncertainty, with the asset falling to an intraday low of $62,684 on Tuesday before recovering to trade near $63,660, a roughly 2% daily decline that pushed July losses to 4% (while wiping out $134 million in bitcoin long positions in a single day).

Mike McCluskey, co-founder of TX and a former Fidelity executive, described the setup bluntly, stating:

“The market has been patient for six weeks. This is the week it finds out if that patience was warranted.”

He added that a hold paired with hawkish language, or a surprise hike, “and the $58,000 to $60,000 range comes back into view quickly.”

TD Securities Sees a Mispriced Hike Risk

Even with markets leaning so heavily toward a hold, TD Securities argues traders are still miscalculating the risk on the other side of the ledger. The bank said the dollar is set to drop once the Fed confirms its hold, arguing current pricing reflects an overpriced chance of a hike that policymakers are unlikely to deliver.

That view builds on an earlier note in which TD Securities strategists said hike pricing looked questionable as market bets on a rate increase rose alongside climbing oil prices and rising U.S.-Iran tensions. The strategists judged an actual July move unlikely, arguing the geopolitical risk premium built into rate futures overstates what the FOMC will actually do at this meeting.

The stakes of that mispricing are unusually high by historical standards. If current hike-risk pricing persists all the way into Wednesday’s decision, TD Securities noted it would represent one of the largest deviations between market pricing and the Fed’s actual policy action in the past decade, a gap the bank expects to close once Warsh confirms the hold.

Beyond Wednesday, TD Securities is calling for the dollar to weaken further over time, forecasting roughly a 2% decline in the second half of 2026 as the Fed stays on an extended hold rather than pivoting toward tightening. That outlook assumes the central bank needs firmer evidence of sustained inflation and labor-market strength before it would even consider a hike, a bar the bank does not expect to be cleared soon.

What a Hold Could Mean for Bitcoin

A hold decision carries direct implications for crypto markets heading into the rest of the week. The Fed’s meeting arrives just before the release of the core personal consumption expenditures (PCE) price index and second-quarter GDP data on July 30, both of which could reinforce or undercut whatever tone Warsh strikes at his 2:30 p.m. ET press conference.

McCluskey laid out the bullish case for bitcoin if the numbers line up, i.e. a hold paired with a dovish tone, strong artificial intelligence capital expenditure guidance, and constructive PCE data could turn the $65,000 level into a genuine attempt at $68,000 to $70,000 through August. A hawkish surprise, by contrast, risks dragging prices back toward the $58,000 to $60,000 zone he flagged.

The dollar call from TD Securities adds another variable to that setup. A weakening dollar has historically coincided with periods of relative strength for bitcoin and other risk assets, since a softer greenback tends to ease financial conditions globally even when the Fed itself stays on hold.