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USD price, news and analysis:

  • The US Dollar has reacted negatively to the results of the US mid-term elections that saw the Democrats win control of the House of Representatives but the Republicans retain the Senate.
  • The result could bring political gridlock to Washington, potentially damaging the US Dollar, which has already eased back on the results.

USD may have further to fall after US elections

The US Dollar index is easing in Europe after the results of the US mid-term elections, which saw the Democrats win control of the House of Representatives but lose control of the Senate. That gives the Democrats a better chance of blocking US President Donald Trump’s agenda and has weakened USD against the other major currencies, with potentially more losses to come.

US Dollar Index (DXY) Price Chart, Hourly Timeframe (November 1-7, 2018)

Latest US Dollar price chart.

Chart by IG

The election results were broadly in line with expectations and the markets were well positioned for the outcome, keeping volatility relatively low. However, the USD remains overvalued by some measures and worries about the US-China trade dispute could re-emerge at any time.

That is likely to boost demand for safe havens such as the Japanese Yen against the background of generally poor market sentiment.

USDJPY Price Chart, Five-Minute Timeframe (November 7, 2018)

Latest USDJPY price chart.

Chart by IG

European stocks climb

As USD eased, EUR and GBP both climbed and there were gains too for European shares, with London’s FTSE 100 up 1.1%, Germany’s DAX up 1.0% and Paris’s CAC 40 up 1.2%. US Treasury bond prices also climbed, with the yield on the 10-year note dropping by almost three basis points in early European business.

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--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex