06 Nov 2024

The US Dollar on a tear, with more than one-percentage gain against most major peers.
Former US President Donald Trump secured over 270 electoral votes needed to become the next US president.
The US Dollar index trades above 105.00, the highest level since early July.
The US Dollar (USD) keeps surging into the US session on Wednesday after former US President Donald Trump secured enough electoral votes to become the next US president. The former US President has secured 277  votes, more than enough to surpass the magic 270 threshold needed to secure a majority. An additional element that might result in more US Dollar strength is the fact that the Republicans have secured a majority in the Senate. While the race to control the US House of Representatives is still undecided, it looks like Trump will not be a lame-duck president and will have support from both institutions when it comes to passing laws.

The US economic calendar is very light on Wednesday. It looks like traders will be able to further assess and focus on the outcome of the US presidential election. Besides the Mortgage Bankers Association (MBA) weekly Mortgage Application numbers, nothing special is expected on the economic data front.
Daily market movers summary: Numerous assumptions in play  
As of this writing, former US President Donald Trump has obtained 277 electoral votes, surpassing the 270 required for victory. In contrast, Vice President Kamala Harris trails with only 224 votes.  
On Thursday, the Federal Reserve is scheduled to hold its monetary policy meeting and announce its policy rate decision. Market participants are anxious to see if Fed Chairman Jerome Powell will provide any insights or implement changes to the monetary policy in light of Trump's potential return to the presidency.  
Asian markets have been negatively impacted, particularly in China, due to impending tariffs once Trump assumes office next year. Meanwhile, European and US markets are experiencing upward momentum.  
The CME FedWatch Tool indicates a 97.5% likelihood of a 25 basis point interest rate cut by the Federal Reserve during Thursday's meeting. Notably, the meeting on December 18 is projected to have a 68.4% chance of a 50 basis point cut from the current rate, reflecting market expectations for reductions this week and in December. Prior to the election results, the probability stood at 80%.  
The US 10-year benchmark yield is currently at 4.45%, approaching the previous high of 4.46%. 

US Dollar Index Technical Analysis: Seeking a Suitable Level for Consolidation  
The US Dollar Index (DXY) is reestablishing its dominance as the leading currency. The Greenback has appreciated significantly against most major G20 currencies, leading to a DXY that has surpassed the 105.00 threshold. Currently experiencing a slight pullback, it is crucial to identify nearby support levels, while the market anticipates several months until Donald Trump is inaugurated again as President, at which point he may implement measures, tariffs, and other factors that could influence various asset classes.  

The new resistance levels to monitor on the upside have not been observed since June and July. The initial target is 105.53 (the high from April 11), which serves as a strong resistance barrier, followed closely by 105.89 (the high from May 2). If this resistance is breached, the next significant level to consider is 106.52, the April high and a double top, which will be the final hurdle before discussions of reaching 107.00 can commence.  

On the downside, the peak from last week at 104.63 appears to be the first critical support level in proximity. If the pullback intensifies, the psychological level of 104.00 and the 200-day Simple Moving Average (SMA) at 103.85 should prevent the DXY from declining further.