The US dollar is in the spotlight as the US presidential election heats up. Multiple major crises barrage the US this year, putting pressure on the presidential seat. Recent polls send mixed signals. Amid COVID-19, global recession, and public health issues, the 2020 US election will take the markets in a jumpy ride. How will the event affect EURUSD?
The incumbent President Donald Trump and the Democratic nominee Joe Biden will battle it out as the election date on November 3 nears. Forex traders focus on the candidates’ views on the controversial US–China trade war and international trade policies in general. So far, both parties have not gone heavy on their economic policy proposals. But expect that more details will be revealed in the coming weeks.
The two prominent candidates seem to acknowledge China’s trade prominence; however, the current US–China trade war could heighten in a Trump regime. On Monday, President Trump announced the prohibition of federal contracts to companies that outsource to China, which could potentially hurt the greenback further. However, he said that it is possible to decouple the economy from China without leading to monetary losses. On the other hand, Joe Biden could lessen the pressure brought by the US–China trade conflict. However, limited deregulation and increase in high-income household tax are expected.
Investors and traders anticipate higher volatility on forex pairs such as EURUSD as the markets react to what the candidates reveal about their foreign policy plans. The first key date to remember is September 18 – the start of early voting.
Meanwhile, the US dollar showed some signs of life as EURUSD continues on the red 6 days in a row since September 1. Despite the recent losses, however, EUR moved against the US dollar recording a 2020 high at 1.2010 on September 1, even after falling 0.13% that day. The currency pair has not visited this level since May 2018.
EURUSD currently shows bullish signals as it moves above the simple moving average lines on higher time frames (50-, 100-, and 200-day SMAs). Bulls will have to push above the 1.20 level to extend an uptrend. EURUSD is trading at 1.1803 as of September 8 (11:33 UTC).
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