Projections favoring Trump’s re-election pushed the dollar index to 105.04, nearing its best single-day performance since March 2020.
Key Points
- EUR/USD dropped 1.57% as a stronger dollar surged on Trump’s victory anticipation.
- Dollar strength pressured the euro to $1.075, posing economic risks for Europe.
- EUR/USD trend remains bearish, with potential further downside.
EUR/USD Daily Price Analysis – 06/11/2024
The EUR/USD pair has experienced a sharp decline, dropping by -1.57% today, driven by dollar strength amid heightened anticipation of a Donald Trump victory in the U.S. presidential election. This so-called “Trump trade” has seen investors positioning for policies likely to include lower taxes and increased trade tariffs, which are perceived as inflationary and supportive of higher U.S. interest rates.
The dollar’s rise has pressured the euro, sending it down to $1.075, a four-month low and on track for its worst day since March 2020. Concerns over potential tariffs on major European industries like autos and chemicals, coupled with security concerns related to Ukraine, present notable risks for the European economy under the Trump administration.
Impact of U.S. Presidential Election and Trump Trade
Investor confidence in the dollar has surged as projections favor Trump’s re-election, with the dollar index spiking to 105.04 and potentially marking its best single-day performance since March 2020.
A potential Republican “Red Sweep” of the Senate and House would grant the Trump administration a stronger hand in implementing its fiscal agenda, which may further bolster the dollar.
European traders, meanwhile, are adjusting expectations for European Central Bank policy, now projecting a slight reduction in the deposit rate to 2% by 2025, down from the pre-election expectation of 2.1%.
Broader Market Effects
The strength of the dollar, driven by the prospect of Trump-led economic policies, has created ripple effects across global markets. Trade-sensitive currencies, such as the Mexican peso and offshore Chinese yuan, have shown significant weakness, reflecting concerns over a more aggressive U.S. trade policy stance.
Additionally, Trump’s inflationary policies may prompt the Federal Reserve to adopt a more hawkish stance, adding further pressure on high-beta currencies.
Key Economic Data and News to Be Released Today
There is no major economic data scheduled for release today that would significantly impact the EUR/USD movement. However, investors remain closely focused on the evolving U.S. election results and any political developments. Given the high sensitivity of the dollar to election-related news, updates on the race will be crucial in driving market sentiment for the EUR/USD in the near term.
EUR/USD Technical Analysis – 06/11/2024
EUR/USD is in a strong bearish trend, particularly due to political influences. Current price action also suggests that price may still continue to spike to the downside in the short-term.
On the 15-minute timeframe, price is currently trading below the 200 exponential moving average. Although the RSI suggests that price may have been oversold, it’s clear that we may have a little pullback to the upside to form a perfect descending triangle pattern before price drop further.
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