The US dollar index fell to a September low as Joe Biden extended his lead over Trump.
With Republicans expected to retain the Senate, Joe Biden will have difficulty implementing his agenda.
BLS data showed that the economy has created more than 638,000 jobs.
The US Dollar Index (DXY) fell by more than 0.25%, reaching an intraday low of $92.30, the lowest since September 2.
Technical chart of the US Dollar Index
Biden leads trump
The greatest catalyst for the development of the dollar index is the results of the presidential elections in the United States. According to the Washington Post, Joe Biden has more than 253 votes compared to the 214 votes of Donald Trump.
In the outstanding states, Biden overtook Trump in Georgia, while the gap narrowed further in Pennsylvania. This means that Biden will be the next president of the United States unless something dramatic happens.
At the same time, the published figures indicate that the Republicans will retain the support of the Senate, which means that it will be a difficult task for Biden to pass critical legislation. For example, he will have difficulty passing a tax reform bill that will increase taxes for the rich. He will also have difficulty passing his $2 trillion clean energy bill.
Nevertheless, he will be able to achieve a lot. For example, he will take back some of the regulations that Trump abolished. He will also be able to refer back to the Paris climate agreement and the nuclear agreement with Iran and return the United States to the World Health Organization (WHO). Above all, he will be able to withdraw most of the tariffs that Trump has imposed.
Payrolls outside agriculture
The dollar index also reacts to non-farm payrolls from the United States. According to the Bureau of Labour Statistics (BLS), the economy created more than 638,000 jobs in October. This was the seventh consecutive month in which the economy created jobs after losing more than 20 million in April. However, the increase was less than in September (660,000).
The unemployment rate fell from 7.9% to 6.9%, which is still higher than the 3.4% level reached before the pandemic. Wages increased by 4.5%, while the average number of hours per week rose to 34.8. At the same time, the closely monitored employment rate rose from 61.4% to 61.7%.
Recent economic figures have shown that the American economy is relatively resilient, although the number of Covid-19 cases continues to rise. For example, data released this week by the ISM showed that the manufacturing and non-manufacturing PMI remained above 50 in October.
Technical Outlook for the US Dollar Index
Technical Table for the Dollar Index
On the daily chart below we can see that the Dollar Index has been under heavy pressure lately. In the last few days it has dropped more than 2.20 and is now trading at its lowest level since September 2. It is also below the 25-day and 50-day exponential moving averages. It has also struggled to move above the $94.50 mark where it formed a double-headed pattern.
With the bears in control, it is therefore only a matter of time before he moves below the important support at $91.73. Read our comprehensive guide on how to invest in Forex and which Forex brokers are best suited to do so.