EUR/USD trades sideways with focus on US presidential election
EUR/USD consolidates around 1.0890 during the European session on Tuesday. The major currency pair remains far from the key resistance of 1.0900 on the US presidential election day. The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, is trading steadily near 103.80 at the time of writing.
The greenback showed a strong buying trend in October as traders expected a win for former US President Donald Trump. However, the greenback struggled to extend its gains further as traders expect a tight race between Trump and current Vice President Kamala Harris now. The odds of a Trump win have taken a hit after a Des Moines Register/Mediacom Poll showed Harris gaining a slight three-point lead in the state of Iowa, where the Republicans had a clear majority in 2016 and 2020.
“A Red Wave (favoring Republicans) would kick-start a sizable USD rally. "This will bring back memories of US Exceptionalism, underpinned by tariffs, tax cuts, deregulation, and negatively impact the outlook for EZs and China," said analysts at TD Securities.
While the US presidential election will be the key event for the US dollar this week, investors will also be watching the Federal Reserve's (Fed) monetary policy decision, due on Thursday. The Fed is widely expected to cut interest rates by 25 basis points (bps) to 4.50%-4.75%, according to the CME FedWatch tool. Investors will be focusing on Fed Chair Jerome Powell's speech for fresh cues on possible monetary policy action in December.
Source: FXStreet
