Nov 06, 2024 (MENAFN via COMTEX) --
(MENAFN - Daily Forex)
The EUR/USD exchange rate has settled just below 1.09 ahead of the all-important US presidential vote, but a Donald Trump victory would spark major selling pressure on the currency pair once again. By Wednesday, the outcome of the vote should be known, and if Trump wins, we expect EUR/USD to approach 1.0760 before the end of the week. However, a Harris win, which was seen as increasingly likely over the weekend, would extend the euro's rally. Moreover, the euro starts this important week with a small gain against the US dollar as markets track the lower odds of a Trump win. A number of polls released over the weekend were more favourable for Harris, with one even suggesting she would pull off a surprise win in Iowa.
Overall, the decline in the odds in Trump's favor would better reflect the uncertainty in the polls, with the margin of error still pointing to a 50/50 tie. The
US dollar closely tracks the odds in the odds, having declared the winner 80% of the time in the past 35 years, rising when Trump's odds are high and falling when his odds are low.
This speaks to the dollar-supportive policy mix proposed by Trump, which includes inflationary tariffs on imports. Accordingly, analysts at TD Securities say that a second Trump presidency would spark a major rally for the US dollar."This would bring back memories of US exceptionalism, supported by tariffs, tax cuts (the red wave), deregulation and negative impacts on global growth prospects. A Harris presidency would bring some weakness to the
US dollar as the Trump risk premium unwinds and a blue wave exacerbates the US dollar's â??â??decline," the analysts said.
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If Harris wins, the euro against the
US dollar could extend its recovery to the 1.10 level. Valentin Marinov, an analyst at Credit Agricole, said:"The EUR/USD and GBP/USD pairs could fall to their lowest levels since the first quarter of 2012 or head lower in response to a Trump victory accompanied by a"red wave" in the US Congress. Conversely, their rise could be limited to 1.10 and 1.33 in the event of a Harris victory and a divided US Congress."
According to stock trading platforms, US stock futures stabilize ahead of the presidential election. According to trading, US stock futures stabilized on Tuesday as investors prepared for the disputed US presidential election. Recent polls indicate a close race between Vice President Kamala Harris and former President Donald Trump, with markets also focusing on which party will control Congress, as a potential victory could lead to major shifts in spending and tax policies.
Investors are also awaiting the Federal Reserve's policy decision later this week, when it is widely expected to cut interest rates by a more cautious 25 basis points. The Dow Jones Industrial Average fell 0.61% on Monday, the S&P 500 fell 0.28% and the Nasdaq Composite dropped 0.33%. Notable declines came from major technology stocks, including Tesla (-2.5%), Amazon (-1.1%) and Meta Platforms (-1.1%). In after-hours trading, Palantir Technologies surged more than 13% after posting strong quarterly results and an upbeat revenue outlook. Meanwhile, NXP Semiconductor shares fell about 6% after issuing a weak outlook, pointing to broader concerns about the macro economy/USD Technical analysis and forecast:
EURUSD Chart by TradingView
Technically, the EUR/USD may remain in its current bearish range until markets and investors react to the U.S. presidential election results and the Federal Reserve's policy decisions. Approaching the psychological support level at 1.0800 would reinforce bearish control, signalling a deeper downward move. Furthermore, a Trump victory could push the EUR/USD down to the 1.0660 support level as an initial target.
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COMTEX_459514705/2604/2024-11-06T04:11:49
