How the U.S. Election Outcome Could Shape DXY's path

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Hey Traders!

In today’s trading session, we’re closely watching the DXY for a potential buying opportunity around the 102.800 zone. Recently, DXY has been trending downward but managed to break out of that downtrend, signaling a possible shift in momentum. Right now, it’s in a corrective phase and approaching the retracement level near the 102.800 support and resistance zone.

Fundamental Analysis: U.S. Election Impact on the Dollar
Today’s election could significantly impact the U.S. dollar, with the outcome likely to shape future economic policies. Here’s how each candidate’s policies might influence DXY:

If Trump Wins:
A Trump victory is expected to strengthen the dollar. Here’s why:

Higher Inflation and Interest Rates: Trump’s policies, including potential tariffs and stricter immigration, are seen as inflationary. Tariffs can increase the cost of imported goods, while reduced immigration may create labor shortages, both driving inflation higher.
Federal Reserve’s Stance: Higher inflation would prompt the Fed to reconsider future rate cuts and possibly lean toward raising rates to control inflation. Higher interest rates make the dollar more attractive, as investors seek better returns.
Tax Cuts and Economic Boost: Trump’s proposed tax cuts are likely to stimulate economic growth in the short term. A booming economy typically supports a stronger dollar as investors favor a robust market.
In this scenario, DXY would likely respond positively, and we could see a strong upward movement.

If Harris Wins:
On the other hand, a Harris victory could weaken the dollar due to different policy priorities:

Lower Inflation and More Fed Flexibility: Harris’s policies are expected to focus more on economic support, potentially through spending programs and fewer tariffs. Lower inflationary pressure gives the Fed more room to keep rates low or even consider cuts.

Market Reaction: Investors may anticipate a slower economic rebound, favoring a weaker dollar, as demand for safe-haven assets like the dollar could decrease.

Your vote is very important!
Joe.
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A win for Trump and the dollar is flying!
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