The recent lack of movement in Wall Street has led investors to adopt a cautious stance, focusing on upcoming corporate earnings. The US dollar has gained strength, reaching a near two-month high and rising approximately 4% since the beginning of the month.
This surge is attributed to expectations of an inflationary environment due to the increasing odds of a Trump presidency and rising Treasury yields. However, analysts are questioning the sustainability of the US dollar's strength, considering the possibility of a sell-the-news reaction following the elections. The US dollar is likely to remain supported in the near term until uncertainties surrounding the upcoming electoral landscape are resolved.
The AUD/SGD currency pair is currently finding support at a lower wedge trendline around the 0.8750 level. Market participants are awaiting further clarity on China's fiscal stimulus measures, which are expected to be announced after the US elections. The effectiveness of recent monetary support from China remains uncertain. A breakdown below the critical support level of 0.8732 could indicate a more bearish outlook, while continued trading within the wedge pattern may lead to a potential recovery.
The strength of the US dollar has put pressure on the EUR/USD pair, causing a retracement of nearly 3.8% since the start of the month. As the pair approaches an upward trendline support at the 1.076 level, buyers may see this as an opportunity for a near-term bounce. The daily oversold technical conditions suggest a potential moderation in the dollar's strength. The 1.076 level is critical for maintaining the broader upward trend, and if it holds, traders may target the 1.093 level for recovery. However, if the trendline support fails, it could indicate strong selling pressure, with the 1.066 level becoming the next significant support area.
The performance of the euro against the dollar will be closely monitored as market participants assess US economic policies and geopolitical developments.