A sustained move above 103,827 indicates the presence of buyers. If this creates enough upside momentum, look for a rise to 104.636 to 104.799.
A sustained move below this level could cause an acceleration towards a pivot point at 103.144.
Election polls encourage profit-taking
With recent polls showing a narrow lead for Democratic candidate Kamala Harris in key battleground states, traders have scaled back their exposure to the dollar. For weeks, a Trump re-election was priced in, with expectations for an inflation policy that could support higher rates and a stronger dollar.
Betting market trends have shifted recently, with Harris trading at 53 cents versus Trump’s 52 cents on PredictIt, reversing previously dollar-leaning positions. Investors are now anticipating a possible rebalancing of dollar-based positions after the election, which will fuel pre-election profit-taking.
Treasury yields reflect demand for safety ahead of the elections
U.S. Treasury yields fell on Monday as investor appetite for safe assets grew. The yield on ten-year government bonds fell by 9 basis points to 4.272%, while the yield on two-year government bonds fell by more than 6 basis points to 4.137%, indicating broader caution in the market. Increased demand for protective positions has also pushed options-based implied volatility on major pairs such as the euro/dollar and dollar/yuan to multi-month highs, underscoring expected shifts in the currency market post-election.
Fed rate cut and global central bank easing expected
A 25 basis point rate cut from the Federal Reserve is widely expected on Thursday, following a half-point cut in September. Traders peg this outcome at a 98% probability, with CME’s FedWatch tool showing strong chances of another cut in December.