The US Dollar (USD) is currently trading higher, with the US Dollar Index (DXY) at 104.92, as election results begin to show a shift in favor of former President Donald Trump. According to FX analysts Frances Cheung and Christopher Wong from OCBC, the latest vote counts in key swing states are likely to influence the dollar’s direction, driving two-way trades in the foreign exchange (FX) markets.
At the time of writing, the focus is on the seven critical swing states—Georgia, North Carolina, Pennsylvania, Michigan, Wisconsin, Arizona, and Nevada—collectively accounting for 93 electoral votes. Early returns indicate Trump gaining momentum in Georgia, with West Virginia flipping in his favor. Although it’s too early to make definitive calls, the tally count news will continue to fuel volatility in the FX markets throughout the day.
DXY Technical Outlook and Resistance Levels
In the short term, daily momentum for the DXY remains bearish, despite a recent rise in the Relative Strength Index (RSI) from near oversold levels. Analysts note resistance around the 105.20 mark, with potential support zones at 103.70/80 (near the 21 and 200-day moving averages), 102.90/103.10 (the 100-day moving average and 38.2% Fibonacci retracement from 2023 highs to 2024 lows), and 102.30 (50 DMA). These levels are critical as traders look for clues on the USD’s near-term direction.
Potential Implications of Election Outcomes
The outcome of the US election will likely have profound implications for the FX market. Should Trump secure a victory, the shift in fiscal, foreign, and trade policies could heighten US-China trade tensions, which would likely bolster the US Dollar and push UST yields higher. This scenario would favor a strategy of going long on gold and shorting the Chinese Yuan (CNH).
Conversely, a victory by Vice President Kamala Harris would likely ease market anxiety, potentially reducing upward pressure on the US Dollar. In this case, USD and UST yields might ease, providing a reprieve for Asian and high-beta currencies, which would likely find support.
Also read : Gold Drops 0.5% As Trump Nears Victory- US Dollar, Bitcoin, And Stocks Surge
As the election results continue to unfold, the DXY is set to experience significant fluctuations, making it crucial for traders to monitor the evolving vote tally closely. OCBC’s analysts predict that the uncertainty surrounding the election will drive two-way trades in the FX markets, with each new update potentially influencing the USD’s trajectory.
