KEY POINTS OF THE ARTICLE:

• Nuanced reaction of the dollar pending a final result
• The dollar index is trading within a triangle

NUANCED REACTION OF THE DOLLAR AWAITING A FINAL RESULT

Following the hotly contested American election, the dollar index fell by -0.139 (-0.15%) on Wednesday.

On Wednesday, the dollar index fell to a one-week low, after reaching a five-year high due to volatility following the vote. A sharp rise in US stock indices on Wednesday reduced cash demand for the dollar. The dollar has also been weakened by the reduction in interest rate spreads. Bond yields have fallen as the major Democratic stimulus bill will struggle to be implemented if the election results confirm that Republicans will keep control of the Senate

On Wednesday, the EUR/USD recovered from a low of more than 3 months and posted modest gains after the weakening of the dollar. The EUR/USD initially fell to a 3-3/4 month low following comments from the ECB and a fall in German bond yields. USD/JPY fell after a two-week high as the uncertain outcome of the US presidential election triggered the purchase of yen

Wednesday's U.S. economic data was negative for the dollar after October ADP employment rose by only +365,000, much lower than expectations of +643,000. Additionally, the October ISM Services Index fell from -1.2 to 56.5, lower than expectations of -0.3 to

The yield on 10-year bonds initially climbed to a high of 0.944% over more than 4 months, due to pre-election rumours of a “blue wave” that would have increased the chances of a stimulus package. However, 10-year bonds finally fell by 13.9 points to 0.760% after Tuesday's election results suggested that Congress would remain divided, reducing the chances of US lawmakers adopting a major

THE DOLLAR INDEX IS TRADING WITHIN A TRIANGLE

The dollar index hit a high yesterday at 94.30, which is now acting as a resistance and is also the transition from a downward slope. The index is on its way back to an upward slope reinforced by a horizontal support at 92.60

The two obLIQUES form a triangle whose output will give the signal for an upcoming major movement. In the meantime, this consolidation between the two terminals may continue

Evolution of the dollar index in 4H data: