Current trend

The US dollar index USDX is showing upward momentum in the area of 105.27, updating July highs and leveling out the predominantly "bearish" trades of the previous week. The instrument is supported by preliminary results of the US presidential election, which strengthen analysts' faith in a possible victory for Donald Trump, the candidate from the Republican party, which is expected to win 51 seats in the Senate thanks to the majority of votes in West Virginia and Ohio, Reuters writes. In the House of Representatives elections, it leads with 177 seats to its opponents' 143, but so far neither side has won the necessary 218 seats to control the lower house of Congress. According to the Polymarket, the probability of Donald Trump winning is 96.8%, while the probability of Democratic Party candidate Kamala Harris winning is 3.1%.

The US dollar is generally reacting positively to current leader Donald Trump, as his party is expected to pursue tougher tariff policies towards China and the EU, which in turn will push the US Federal Reserve to more gradually reduce borrowing costs. At the same time, at the meeting, which will take place on Thursday, November 7, the regulator will still adjust the interest rate by –25 basis points, and another reduction of the indicator by a similar amount in December is not excluded.

The US macroeconomic statistics presented the day before turned out to be mixed and did not have a noticeable impact on the instrument's dynamics: the ISM Services PMI rose from 54.9 points to 56.0 points in October, while analysts expected 53.8 points, and the S&P Global Services PMI slowed slightly from 55.3 points to 55.0 points, contrary to neutral forecasts, while the S&P Global Composite PMI fell from 54.3 points to 54.1 points.

In addition, markets are still assessing the October labor market report released late last week: Nonfarm Payrolls fell sharply from 223.0 thousand to 12.0 thousand, compared to preliminary estimates of 113.0 thousand, Average Hourly Earnings adjusted from 0.3% to 0.4% month-on-month and from 3.9% to 4.0% year-on-year, and the Unemployment Rate settled at 4.1%.

Support and resistance

Bollinger Bands on the daily chart show a steady increase. The price range is expanding but it fails to conform to the surge of "bullish" sentiments at the moment. MACD indicator reverses to growth while forming a new buy signal (the histogram is about to consolidate above the signal line). Stochastic shows similar dynamics and is currently located only in the center of its area, which indicates sufficient potential for the development of a corrective upward trend in the near future.

Resistance levels: 105.00, 105.30, 105.58, 106.00.

Support levels: 104.50, 104.24, 104.00, 103.60.

Trading tips

Long positions can be opened after a breakout of 105.00 with the target of 106.00. Stop-loss — 104.50. Implementation time: 2-3 days.

The return of "bearish" trend with the breakdown of 104.24 may become a signal for new sales with the target at 103.60. Stop-loss — 104.50.