The consensus trade on Wall Street has been straightforward for a while: bet on the dollar, because US economic exceptionalism isn’t going anywhere. Now some of the biggest names in global finance are lining up to say that trade is getting stale.
Currency strategists at Morgan Stanley, TD Securities, and Credit Agricole are bucking the crowd by forecasting dollar weakness heading into 2026. J.P. Morgan has joined the bearish chorus too.
What the bears are actually saying
Morgan Stanley expects the US dollar to remain weak through the second half of 2026, driven by moderating inflation and lowered expectations for rate hikes. The bank sees a potential bottoming out and recovery by 2027.
TD Securities is putting numbers on it. The bank forecasts a USD depreciation of 3-6% against other major currencies in 2026. Their thesis rests on two pillars: global economic resilience outside the US, and the anticipated easing of Federal Reserve monetary policy. TD is also recommending a shift from carry trades to value trades, which in plain English means they think the interest rate advantage of holding dollars is shrinking enough that it’s time to look elsewhere.
