Key Points
- Donald Trump will become the new President of The United States of America.
- The stock markets have surged, and many believe the Trump Rally is back.
- The Federal Reserve will likely cut rates by 25bps this week, but forward guidance will be key.
- The dollar is surging, and traders must be patient for the next wave of action.
Donald Trump Defeats Kamala Harris To Become 47th US President
Donald Trump has defeated Kamala Harris to become the 47th President of the US after securing 277 Electoral College votes. All the swing states won by Joe Biden in 2020 have been reversed in what is being dubbed the “greatest comeback in the history of politics.”
The stock market surged higher as Trump’s victory became more apparent overnight. In fact, when writing this article, the Dow Jones was up 2.8%, and the S&P500 was up 2.2%. Is the “Trump Rally” on the cards?
Does The Federal Reserve Decision Matter?
There has been a lot of debate as to whether the Federal Reserve interest rate decision on Thursday will have any impact on the market because of the US presidential election, and the short answer is yes!
The Federal Reserve setting interest rates is a huge market driver in any environment, and this will be no different. Admittedly, it is pretty nailed on that a 25bps rate cut is on the way, but the forward guidance around future rates after the NFP miss will be crucial for markets. If Jerome Powell acknowledges rising inflationary pressures and the need to be less dovish, then expect the dollar to rise. Jerome Powell may also face questions about the new President, Donald Trump, so seeing how he feels about the relationship will be interesting.
EUR/USD Prediction
The “Trump Win Target” set out in my previous EURUSD article has been hit, and the dollar bulls are now out to play. Traders may look to follow this trend lower by waiting for a retest of the EMA12 on the chart above. If the trend is to reverse then the price would need to exceed the EMA36 at 1.08400.
USD/JPY Prediction
As for USD/JPY, the bulls remain in control. Trump’s victory has meant another higher high for this pair, and it has breached the 154 mark. Similar to EUR/USD, traders could ride the wave of this trend by waiting for a retest of the EMA12 at 153.575.
GBP/USD Prediction
Due to the severity of the pound’s weakness over the last few weeks, GBP/USD became oversold. It had been recovering well before Trump was announced as the new President. Interestingly, GBP/USD is yet to test the yearly lows at 1.28432, so how the price reacts from here will be crucial. Look for a liquidity sweep of the lows and then potentially a move back up towards 1.30000.
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
