USD up to highest gains in 4 months as Trump claims election victory
Trump's election victory has propelled the dollar index near historic highs, driven by trade tariff expectations and potential fiscal policy shifts. However, interest rate cuts may threaten the dollar's momentum.
Key points
- Dollar index rises to 104.8 following Trump's election victory
- Potential tariffs on Chinese goods strengthen dollar but risk retaliation
- Euro drops 1.6% against USD as Eurozone faces tariff threats
- Yen weakens beyond 154 per dollar with rising US Treasury yields
- Peso falls past 20.7 per USD amid dollar strength and tariff concerns
USD Up to Highest Gains in 4 Months as Trump Claims Election Victory
Following Donald Trump's victory in the US presidential election, the dollar index surged to around 104.8, marking significant gains attributed to the election's clarity. Trump's focus on trade tariffs has fortified the dollar against many other currencies, but the control of Congress remains pivotal for potential fiscal shifts in spending and taxes. Meanwhile, the Federal Reserve is expected to cut interest rates by 25 basis points on Thursday, with another similar reduction anticipated in December. This forecast could weaken the dollar, as interest rate declines usually diminish a currency's attractiveness, potentially leading to depreciation unless economic conditions improve or fiscal policies remain stable.
Price Action: Dollar Up Against Yen, Euro, Yuan, and Peso
November has been bullish for the US dollar, gaining significantly against several major currencies after Trump's win. The euro is experiencing its worst day since March 2020, dropping over 1.6% to 1.07111 due to fears that Trump's tariffs could impact key Eurozone sectors like autos and chemicals. The yen weakened beyond 154 per dollar, influenced by rising US Treasury yields and potential interest rate hikes in Japan. The yuan fell past 7.17 per dollar as Trump's potential tariff policies on Chinese goods stirred market concerns. The peso dropped past 20.7 per USD, its lowest in over two years, with Trump's tariffs threatening Mexico's export market and a potential hawkish Fed further pressuring the currency.
How Might a Trump Presidency Influence the Future US Dollar?
Donald Trump's economic measures could have significant impacts on the US dollar. His proposed universal baseline tariff on all US imports, with a 60% tariff on Chinese goods, may initially strengthen the dollar by reducing imports and boosting domestic industries. However, these tariffs could trigger retaliatory measures, potentially weakening the dollar by harming US exports. Lower corporate tax rates under Trump's plan might attract investment, possibly boosting the dollar, but fiscal deficits could raise concerns regarding long-term economic stability, exerting downward pressure. Trump's influence on Federal Reserve appointments might shape monetary policy, and a preference for lower interest rates could reduce the dollar's appeal to international investors. The dollar's trajectory will depend on how these policies influence economic growth, trade dynamics, and investor confidence.
How to Trade US Dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
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