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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.
Credit Agricole projects the EUR/USD exchange rate hitting 1.14 in Q4 2025 before pulling back to 1.10 in 2026, reflecting ongoing adjustments in rate differentials between the US and Europe.
J.P. Morgan rounds out the group with a net bearish dollar outlook for 2026, focusing on labor market softness in the US and what they see as increasingly favorable conditions for non-USD currencies.
Why the consensus is cracking
The bull case for the dollar has been built on a simple foundation: the US economy keeps outperforming, the Fed keeps rates higher than everyone else, and capital flows into dollar-denominated assets. Currency markets are forward-looking and start pricing in rate cut expectations months in advance. The divergence between these banks and the broader consensus reflects a bet that the gap between the US and everyone else is narrowing.
What this means for crypto investors
A weaker dollar has historically been linked with increased risk-taking and rising digital asset prices, as the relative cost of holding non-USD assets drops. Morgan Stanley has suggested long-term returns for digital assets at around 6%, though with annualized volatility of roughly 55%.
If the dollar does depreciate by 3-6% as TD Securities expects, that erosion of purchasing power creates a natural incentive to diversify into assets that aren’t tethered to the greenback. Bitcoin’s narrative as a non-sovereign store of value gains relevance in that environment.
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