Dollar Holds Strong, EUR/USD Faces Pressure: Election Focus

The dollar remains strong in European trade, with EUR/USD under pressure. Trump’s election race continues to shape market sentiment and influence currency moves.

The U.S. dollar continues to hold firm across major currency pairs in European morning trade, maintaining its upward momentum but is not showing signs of further substantial gains. Among the notable moves, the USD/JPY pair has climbed 1.5%, reaching 153.95, with an earlier peak of 154.37, as the greenback sustains its dominance in global markets. On the other hand, EUR/USD has seen a decline of 1.5%, now trading at 1.0765. However, it has recovered from earlier lows of 1.0702, levels reminiscent of market sentiment during Donald Trump’s 2016 presidential run.

EUR/USD Chart Analysis: Rejection Near Key Moving Average

The EUR/USD daily chart presents an intriguing technical picture. After a brief rally earlier this week, fueled by narrowing odds between Trump and Vice President Kamala Harris ahead of the election, the pair has encountered a stiff rejection near the 100-day moving average. The bounce from the earlier lows has largely fizzled out, suggesting that the bullish sentiment for the euro is losing steam.

Dollar Holds Strong, EUR/USD Faces Pressure: Election Focus

As price action stays below the 1.0800 level, sellers are regaining control. Traders are now eyeing the October low at 1.0760 for potential downside pressure. A break below this level on the daily close could open the door to further losses for the euro, putting more focus on bearish trends for the remainder of the week.

Trump’s Election Campaign Still Dominates Market Sentiment

While the dollar’s strength persists, the ongoing election race heavily influences broader market sentiment. Trump’s continued presence in the political spotlight significantly impacts market behavior, with “Trump trades” continuing to dominate investor decisions. These trades are shaping investor outlooks, particularly in the context of the U.S. elections, and will likely remain a key driver of volatility in the near term.

The next crucial development is the balance of power in the U.S. House of Representatives. The outcome of these elections will likely significantly impact market sentiment, adding to the already heightened uncertainty as investors prepare for potential shifts in U.S. fiscal and monetary policy.

As the election landscape continues to evolve, the markets are bracing for further fluctuations. The dollar is positioned to remain a focal point in the currency markets for the time being.

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