euro-bank-notes - EUR
  • US Dollar (USD) pulls back from recent gains as trades adopt a more neutral position
  • Joe Biden ahead in the national polls, but swing states show a tighter race
  • A Blue wave could drag on the USD, as large stimulus deal would be expected
  • Euro (EUR) advances despite surging covid cases

The Euro US Dollar (EUR/USD) exchange rate is advancing, snapping a 6 day losing streak.  The pair settled -0.04% lower on Monday at US$1.1640, after dropping to a low of US$1.1623 a fresh 5 week low. At 09:15 UTC, EUR/USD trades +0.3% at US$1.1685.

The US Dollar is easing lower across the board as traders adopted a more neutral position ahead of today’s US Presidential election.

The US Dollar had been advancing versus its major peers across the past week as covid cases surged and investors sought out the US Dollar’s safe haven properties. With more nations going back into lockdown, fears have been growing that the economic recovery will be derailed. However, today the focus is firmly on the election and given that it is a tight race many trades are scaling back positions ahead of what is expected to be a volatile 24 hours.

Joe Biden has been leading in the national polls by a comfortable 7 points for some time now, although the race is tighter in some key swing states, which will decide the election.

Should Joe Biden manage to win the race, a blue wave, which includes control of the Senate is needed for the markets to really get excited about stimulus. This would be very US Dollar negative.

A Republican controlled senate indicates more gridlock to come and the markets will need to drastically scale back stimulus expectations. Under this scenario analysts expect the US Dollar to be firmer.

The Euro is capitalising on the weaker US Dollar. Any move higher in the Euro could be capped as covid cases on the old continent continue to surge and as the two largest economies France and Germany head into lockdown.

There is no high impacting Eurozone data today. Yesterday, the Eurozone manufacturing PMI report revealed strong growth in October. The recovery was mostly driven by Germany as data highlights the divergences between Eurozone economies as the recovery continued.