U.S. Dollar Retreats As Democrats Win The U.S. House And Senate: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Tests New Lows After Midterm Elections

U.S. Dollar Index is losing ground as Democrats won control in both the Senate and the House. Democrats’ victory may put some pressure on AI-related projects, which is bearish for the American currency.

Traders also focused on the ISM Services PMI report for October. The report indicated that ISM Services PMI declined from 54.9 in September to 54.5 in October, compared to analyst forecast of 54.8.

I’d note that U.S. Dollar Index managed to move away from session lows after the initial sell-off. Currently, U.S. Dollar Index is trying to settle back above the resistance level at 101.50 – 101.65. In case this attempt is successful, U.S. Dollar Index will head towards the 50 MA at 101.91. A move above the 50 MA will open the way to the test of the resistance at 102.35 – 102.50.

EUR/USD Gains Ground As Euro Area Inflation Rate Rises To 4%

EUR/USD moved higher as traders focused on results of U.S. midterm elections and reacted to inflation data from the EU.

Euro Area Inflation Rate increased from 3.8% in September to 4% in October, in line with analyst expectations. Core Inflation Rate remained unchanged at 2.5%.

In case EUR/USD manages to settle above the resistance level at 1.1250 – 1.1265, it will head towards the next resistance at 1.1350 – 1.1365. On the support side, a move below the 1.1220 level will push EUR/USD towards the support at 1.1175 – 1.1190.

GBP/USD Tests Resistance At 1.3485 – 1.3500

GBP/USD moved higher, supported by Democrats’ victory in U.S. midterm elections and falling oil prices. Oil prices are down by -5% as traders bet on de-escalation in the Middle East.

The nearest resistance level for GBP/USD is located in the 1.3485 – 1.3500 range. If GBP/USD climbs above the 1.3500 level, it will head towards the next resistance at 1.3560 – 1.3575. RSI is close to overbought territory, but there is enough room to gain momentum in case the right catalysts emerge.

USD/CAD Moves Lower Amid Rising Demand For Commodity-Related Currencies

USD/CAD pulled back as traders reacted to the strong rally in precious metals markets. Gold gained 2.9%, while silver was up by +4.2%. Other commodity-related currencies have also gained upside momentum in today’s trading session.

If USD/CAD settles below the 1.3950 level, it will head towards the nearest support level, which is located in the 1.3900 – 1.3915 range. On the upside, USD/CAD needs to settle back above the resistance at 1.3985 – 1.4000 to have a chance to gain momentum in the near term. In this case, USD/CAD will head towards the next resistance at 1.4070 – 1.4085.

USD/JPY Attempts To Settle Above 158.50 As Traders Ignore Falling Treasury Yields

USD/JPY continues its attempts to settle above the resistance level at 158.00 – 158.50 despite falling Treasury yields and falling oil prices.

In case USD/JPY manages to settle above the 158.50 level, it will head towards towards the next resistance at 160.00 – 160.50. Bulls will likely stay cautious as BoJ may intervene to provide support to the yen in case USD/JPY climbs above the psychologically important 160.00 level.

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