USD SURGES IN THE WAKE OF U.S. ELECTION

Former U.S. President Donald Trump, now elected as the 47th president of the United States. The president elects previously served as the 45th president from 2017 to 2021. This year’s race for the White House was fiercely contested between Trump and the current Vice President, Kamala Harris. In a historic parallel to the 2016 election, Trump once again emerged victorious, securing the necessary 270 electoral votes to defeat Harris. As of the time of writing, Donald Trump has surpassed the 270 electoral votes, reaching 277 with 71,133,334 votes and 51% of the popular vote. Meanwhile, his closest opponent Vice President Kamala Harris, has garnered 224 electoral votes with a total of 66,202,705 votes and 47.5%.
Financial markets view the potential return of former President Trump as likely to introduce policies that could strengthen the greenback. Analysts suggest that a Republican victory might lead to increased tariffs, particularly on imports from countries like China, along with possible tax cuts aimed at boosting domestic spending. These policy changes could create favorable conditions for the dollar by driving demand for U.S. assets and attracting more investors to the market.
TECHNICAL VIEW
Fig. 1 USD INDEX (DXY) 4H, Tradingview.

Markets once again experienced high volatility, with a series of significant but risky moves. The U.S. dollar saw a sharp rally, breaking past its July 9th 2024 resistance level of 105.208 and currently consolidating in that zone. Technical analysts suggest the dollar index may stabilize around 104.596, aligning with the 38.2% Fibonacci retracement level, before a potential next surge to target 106.00. However, if the index falls below this level, it could signal a further decline to the 50%, 61.8% and 78.6% Fibonacci levels at 104.327, 104.100, and 103.777 respectively. Analysts also note that a breakout below these levels could open up more downside possibilities.
The ripple effect of the dollar's surge impacted other currencies, with those quoted against the USD declining, while pairs with the USD as the base saw gains. Gold was also affected, dropping about 2.2% to around $2,702.20 per ounce at the time of writing.