The US Dollar Faces Uncertainty Ahead of the Presidential Election
- Traders anticipate volatility as the US heads to the voting booths on Tuesday.
- Legal battles and recount requests could prolong uncertainty over the election results.
- Market stability hinges on a potential landslide victory to avoid prolonged legal battles.
The US Dollar Index (DXY) is showing signs of weakening as the US presidential election approaches, with the Greenback trading below 104.00. The outcome of the election may not be clear immediately, as legal challenges and recount requests could extend the process. This uncertainty could mirror the legal disputes seen during George W. Bush’s victory in 2000, potentially impacting market stability into the year-end.
Key economic data, including the final readings of the S&P Global and ISM Services PMI for October, are expected to provide insights into the US economy’s performance.
Daily Market Movers: What to Watch
- Monitor headlines for updates on the US presidential election outcome.
- S&P Global releases final October PMI readings, with the Services PMI slightly softer at 55.
- ISM publishes its October services sector reading, showing an increase to 56.
- US Treasury auctions a 10-year note amid election uncertainty.
- US equities are rising, with Nasdaq up nearly 1%.
- Expectations of a Fed interest-rate cut increase, with a 98.0% probability for a 25 bps cut.
- The US 10-year benchmark rate is at 4.36%, trending higher.
US Dollar Index Technical Analysis: Charting the Path
The US Dollar Index (DXY) remains near the 200-day Simple Moving Average (SMA) at 103.84, poised for potential volatility post-election. Key levels to watch include:
- Resistance at 104.00 and the October 29 high at 104.63.
- Support at the 100-day SMA at 103.12 and the pivotal level of 103.18.
- Further support at 101.90 and the 55-day SMA at 102.16.
Banking Crisis FAQs
- The Banking Crisis of March 2023 revealed vulnerabilities in US banks due to tech-sector exposure.
- SVB’s insolvency triggered a chain reaction, impacting US Treasury bonds and leading to a run on the bank.
- The crisis shifted expectations on Fed interest rate policy, influencing the US Dollar’s performance.
- Gold benefited from the crisis as a safe-haven asset and due to reduced rate-hike expectations.