Kevin Warsh's Fed Decision Looms: Here's Why TD Securities Says the Dollar Could Still Drop

The Federal Reserve is expected to hold its benchmark rate at 3.50% to 3.75% for a fifth consecutive meeting when Chair Kevin Warsh delivers the Federal Open Market Committee (FOMC) decision on July 29. However, TD Securities argues the U.S. dollar could still weaken as markets overprice the odds of a surprise hike.

CME FedWatch data places the probability of a hold between 95% and 98%. A fifth straight hold would mark the central bank’s unchanged stance since Warsh succeeded Jerome Powell in May. Bitcoin has already priced in some uncertainty, falling to an intraday low of $62,684 on Tuesday before recovering to near $63,660—a roughly 2% daily decline that pushed July losses to 4% and wiped 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: “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 heavily toward a hold, the bank says traders are still miscalculating the risk on the other side. The dollar is set to drop once the Fed confirms the hold, according to the bank, as current pricing reflects an overpriced chance of a hike that policymakers are unlikely to deliver. This view builds on a previous note where TD Securities strategists said hike pricing looked questionable due to rising oil prices and U.S.-Iran tensions. They judged an actual July move unlikely, arguing the geopolitical risk premium built into rate futures overstates what the FOMC will do.

If current hike-risk pricing persists until the 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. The gap is expected to close once Warsh confirms the hold. Beyond Wednesday, the bank forecasts a 2% dollar 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 considering a hike.

A hold decision carries direct implications for crypto markets. The Fed’s meeting arrives just before the release of the core PCE price index and second-quarter GDP data on July 30, both of which could reinforce or undercut Warsh’s tone at his 2:30 p.m. ET press conference. McCluskey outlined a bullish case for Bitcoin: a hold paired with a dovish tone, strong AI 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, however, risks dragging prices back toward $58,000 to $60,000.

Historically, a weakening dollar has coincided with periods of relative strength for Bitcoin and other risk assets, as a softer greenback eases financial conditions globally even when the Fed itself stays on hold. Markets have fully priced out any rate cuts for 2026 amid geopolitical tensions.

Source: https://news.bitcoin.com/featured/kevin-warsh-fed-decision-dollar-td-securities/