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Dollar may regain strength after the election dust settles
Forex
11/07/2018

Dollar may regain strength after the election dust settles

The greenback is edging lower on Wednesday amid profit-taking as midterm election outcome matched market expectations. During the European session the dollar got under the renewed selling pressure as investors continue to digest election results.

The greenback is edging lower on Wednesday amid profit-taking as midterm election outcome matched market expectations. During the European session the dollar got under the renewed selling pressure as investors continue to digest election results.

However, after the dust settles, the buck could regain strength and move to the offensive amid positive expectations ahead of the FOMC meeting which concludes on Thursday. The fact that Democrats took control of the House of Representatives will hardly affect the Fed policy, at least in the medium term. Therefore, the central bank will likely reiterate that the policy remains accommodative and that further progress on hiking rates is needed.

As soon as the market shifts its focus from the elections to the Fed meeting, the downside pressure on the USD could ease, which will open the way to a rebound in the greenback across the board. In this scenario, EURUSD will fail to challenge the 1.15 barrier, while GBPUSD could get back below 1.31.

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