Dollar Spur by Trump’s Leading Position in Election

• Donald Trump's current leading in the U.S. election spurred the dollar to jump more than 1%.
• BTC was fueled by the “Trump” effect and is back to the all-time high territory.
• BoE and Fed monetary policies are due tomorrow and may fluctuate the dollar and the Sterling. 

Market Summary

As vote counting for the U.S. election continues, Donald Trump is currently leading, which has spurred a “Trump trade” sentiment in financial markets. This momentum has caused the U.S. dollar to surge, with the Dollar Index jumping nearly 1%. Wall Street responded positively as well, with both major indices closing higher. Tesla shares climbed in the last session, as Elon Musk’s alignment with the Trump campaign positioned the company to benefit from current election developments.

Bitcoin (BTC) also rallied near its previous high, trading above $72,000, as Trump has historically been linked to digital assets in campaign rhetoric, stirring optimism among crypto traders.

Outside of the election, traders should remain vigilant of central bank actions, with the Bank of England (BoE) expected to announce its first rate cut soon, which could weigh on the British Pound. Additionally, the Federal Reserve’s monetary policy decision is scheduled for tomorrow, with an anticipated 25 bps rate cut that could influence dollar strength.

Finally, the Chinese National People’s Congress is underway, and markets are watching closely for announcements of a large-scale economic stimulus package from Beijing, which could support global risk assets, particularly commodities and currencies tied to Chinese trade.

Current rate hike bets on 7th November Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (4.4%) VS -25 bps (95.6%) 

Market Movements

DOLLAR_INDX, H4

Should Trump win, a somewhat stronger dollar is expected due to his pro-growth policies, which likely would support higher interest rates and tariffs, adding tailwinds to the currency. However, from today’s elevated levels, market sentiment suggests that dollar depreciation could follow the election, irrespective of the victor. In Asian trading, Treasury yields are climbing as bonds sell off, indicating market expectations of potential Trump-backed policies. The 10-year Treasury yield rose over 4 basis points, providing a proxy trade for a possible Trump victory, as higher yields tend to support the dollar, which is also strengthening against major currencies in Asia.

The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 59, suggesting the index might extend its gains after breakout since the RSI stays above the midline. 

Resistance level: 104.35, 105.15

Support level: 103.45, 102.35

XAU/USD, H1

Gold remains in a narrow trading range near $2,740 an ounce, as participants adopt a wait-and-see approach pending clearer election results. The precious metal’s upward potential remains strong, as even a modest move to the upside could push gold to new highs, especially with this year’s trend of record-setting prices. Last week, gold reached $2,790.10 an ounce, and with political uncertainties lingering, investors may look to gold as a hedge.

Gold prices are trading flat while currently testing the support level. MACD has illustrated increasing bullish momentum, while RSI is at 51, suggesting the commodity might extend its gains since the RSI stays above the midline. 

Resistance level: 2755.00, 2775.00

Support level: 2735.00, 2720.00

GBP/USD，H4

The British Pound faced heavy selling pressure at the start of Wednesday’s session, posting a sharp decline as the U.S. dollar strengthened. This dollar surge was fueled by Donald Trump’s current lead in the U.S. election vote count, which has sparked a risk-on sentiment favouring the dollar. Additionally, the Pound is weighed down by expectations of a rate cut from the Bank of England (BoE), with the decision anticipated on Thursday. This potential policy easing from the BoE is adding to bearish sentiment around the Pound, amplifying its decline against the dollar.

GBP/USD traded below its previous low level, breaking its bullish structure and suggesting a bearish bias for the pair. The RSI declines while the MACD remains above the zero line, giving the pair a neutral signal. 

Resistance level: 1.3040, 1.3125

Support level: 1.2815, 1.2680

EUR/USD，H4

The EUR/USD pair experienced a notable drop during Wednesday’s Sydney session, largely driven by the strengthening U.S. dollar amid market reactions to Donald Trump’s current lead in the U.S. election vote count. Additionally, the euro is under pressure from recent weak economic data and the dovish tone from the European Central Bank (ECB), which has further exacerbated the pair's decline. This combination of a robust dollar and a struggling euro is intensifying the bearish outlook for the EUR/USD pair in the near term.

The EUR/USD pair took a big hit and is approaching its recent low level again, suggesting a bearish bias for the pair. The RSI has declined to near the oversold zone while the MACD has a deadly cross at the top, suggesting the bullish momentum is vanishing. 

Resistance level: 1.0815, 1.0890

Support level: 1.0735, 1.0675

USD/JPY, H4

The USD/JPY pair found support around the previous consolidation range near the 151.80 level and has since rebounded, indicating a bullish bias. The Japanese Yen is perceived as vulnerable in the event of a Donald Trump victory, with market expectations suggesting the pair could target the 155.00 mark if Trump secures the Oval Office. Currently, USD/JPY is reacting to Trump’s lead in the ongoing vote count, contributing to sustained yen weakness amid heightened election-driven market sentiment.

The USD/JPY pair rebounded and surged past the downtrend channel, suggesting a bullish bias for the pair. The RSI jumped sharply while the MACD had a golden cross, suggesting the bullish momentum was gaining. 

Resistance level: 155.00, 156.25

Support level:  152.75, 151.70

HSI (HK50), H4

The Hang Seng Index (HSI) is trading sideways, hovering above a critical gap zone. A break below this zone would likely confirm a bearish signal for the index. Despite a surge in the previous session, the HSI is now forming an evening star candlestick pattern, often indicative of a potential trend reversal. Meanwhile, market participants are closely watching for a possible jumbo-sized economic stimulus package from the Chinese government, which could boost momentum and drive the index upward if implemented.

HSI has been trading sideways for the past 2 weeks, a break from either side shall provide a signal for the pair. The RSI and the MACD have also hovered sideways, giving a neutral signal for the index. 

Resistance level:  22160.00, 22220.00

Support level:  19800.00, 19130.00

CL OIL, H4

Oil prices surged as Tropical Storm Rafael neared the Gulf of Mexico, where it’s expected to intensify to a category 2 hurricane, potentially halting up to 4 million barrels of U.S. oil production this week. Major energy companies have begun evacuations and suspended offshore operations in preparation. Meanwhile, OPEC and its allies (OPEC+) announced a delay in their planned December production increase due to weak demand and rising output from non-OPEC producers, creating further supply concerns. These converging factors have heightened market anticipation of potential disruptions in oil supply and price volatility.

Oil prices are trading higher while currently near the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 61, suggesting the commodity might experience technical correction since the RSI retreated sharply from overbought territory. 

Resistance level: 72.60, 74.75

Support level: 69.90, 68.45