The US Dollar index is falling as traders react to Joe Biden’s victory.
The focus is now shifting to the Senate, which will likely remain under Republican control.
The most important data this week will be the U.S. Inflation figures.
The U.S. Dollar Index (DXY) has dropped more than 0.15% as traders react to the outcome of the U.S. election. It has fallen for the last three consecutive days and is trading at $92.18, the lowest level since September 2.
Dollar Index Under Pressure
Biden elected president
Joe Biden was declared the winner of the U.S. election on Saturday, after exceeding the decisive 270 votes in the electoral college. He is now the elected president until he is sworn in on January 20.
The dollar index was down after it became clear that he would extend his lead next week. This decline is mainly due to the fact that the election, which is a key risk in the market, has been completed.
The focus will now be on Joe Biden’s agenda. During the election campaign he promised to implement several left-wing policies, including tax increases for businesses and the wealthy. He also promised to spend trillions of dollars on promoting American infrastructure and fighting climate change. In health care, he promised to reduce the cost of prescription drugs and to strengthen Obamacare.
In most of these policy areas, however, he faces a difficult task, as the Senate must pass some of these goals. For example, to raise taxes for a group, he will need a majority in the Senate that the Democrats lack. It will also face the challenge of raising funds for investment in infrastructure, since the Republicans are not interested in incurring further debt.
US inflation data in sight
This week, the Dollar Index will also react to the upcoming U.S. inflation numbers and a statement by Jerome Powell and other Fed officials. Powell will participate in the annual forum of the European Central Bank (ECB), which will be held virtually. This forum will take place a week after the bank left interest rates unchanged.
The DXY will also react to the inflation figures from the US, which will be released on Thursday. Analysts surveyed by Reuters expect monthly consumer prices to have risen by 0.2% in October. This will be the fifth consecutive month of gains. However, the annual inflation rate will remain below 2%.
Technical Outlook for the US Dollar Index
Technical table of the US Dollar Index
The Dollar Index is trading at $92.16, the lowest level since September. On the daily chart, this price is below the 25-day and 15-day exponential moving average (EMA). It is also trading at a low of $91.75, which is the lowest level for the year to date. The Relative Strength Index (RSI) has also moved below 40, indicating that the price will continue to fall. Start trading currencies by reading our comprehensive reviews of foreign exchange brokers.