Dollar hangs on to most of its gains as the US election proves too close to call on the night itself
In a way, the market is pretty much reversing the moves from yesterday as we see the dollar recoup the losses going into election day itself. The greenback is firmer across the board with EUR/USD still down by 0.5% at 1.1653 currently.
The pair is off its earlier low of 1.1603, testing daily support from the late September lows @ 1.1612-27, before buyers are seeing the rebound limited by the 38.2 retracement level @ 1.1667 and the 100-hour MA (red line) @ 1.1670.
The 100-day moving average @ 1.1666 is also a key level to consider in the day ahead.
For now, the dollar is holding firmer but gains are more measured as the market continues to digest the possibilities that may ensue once there is an election result.
I reckon there’s only two ways this could really play out. A Biden win will likely pin the dollar down but amid the possibility of a gridlock in Washington, the idea of stimulus plans falling through may lend a bid into the greenback if risk assets stutter.
A Trump victory should see the greenback rally on the knee-jerk reaction but that will likely be met by offers down the road once the market settles down and return to the status quo before the election took place.