The US Presidential election will take place on November 5, 2024, and this is the main event to focus on today. Both Donald Trump and Kamala Harris have equal chances to enter the Oval Office, which adds uncertainty to the financial markets. Traders and investors fear that if Donald Trump becomes the president of the United States, he will likely launch tariffs, which may lead to a new era of trade wars between the US and China and the US and Europe. 

EUR/USD Remains Under Pressure on Tuesday

The US Presidential campaign is not the only price driver for the upcoming days. The Eurozone’s latest data has shown that inflation is accelerating, which may prevent the European Central Bank from further easing steps. According to the latest data, HCPI y/y in the Eurozone has increased by 2.0%, which is above the 1.9% that was expected by market participants. Moreover, Core CPI y/y has also increased by 2.7%, which is above expectations.

The latest economic data in the region has demonstrated further recovery as the quarterly economic growth in the Eurozone has improved by 0.4% as compared to the previous 0.2% in the second quarter. All these aspects allow the central bankers to review their position and avoid aggressive expansionary steps in the near future.

The currency pair moves above the SMA 50 on the hourly chart meaning that EUR/USD is in the uptrend. It has recently tested the moving average and rebounded from it offering more trading opportunities for buyers. However, the growth is still limited due to the US presidential campaign. The closest resistance level at 1.0910 will likely prevent the currency pair from further growth today.

On the downside, EUR/USD may retest the SMA50 and if it manages to break the line, the closest support level will be at 1.0850. 

GBP/USD: Upside is Limited in Short Term

The BoE meeting is among the key events to consider this week. The voting members are likely to choose a 25 bps cut on Thursday, which is already included in the price. However, the next move by the Bank of England is not clear as the inflation is close to 2% and the Labour budget with higher taxation is likely to stimulate inflation even more. Therefore, markets have already played the current interest rate cut but market participants are not sure about whether the BoE is going to keep the current speed of rate cuts in 2025.

The Fed meeting that will conclude the same day as the BoE one will also unlikely to bring any surprises. The Federal System is expected to make another rate cut by 25 bps this year. However, similar to the BoE, the Fed has some more space as the latest US economic data was better, which allows the central bank to avoid aggressive expansionary steps. Therefore, the focus shifts to the FOMC press conference, which will take place after the rate decision. 

The currency pair is moving upwards and continues the uptrend after testing the SMA50, which acts as a support level now. GBP/USD has a limited upside potential due to the US election that takes place today, which means that a correction is around the corner. The closest support level lies at 1.2940. If GBP/USD manages to break it below, the next will be at 1.2900, which is a round number. On the upside, we can see GBP/USD testing 1.3000, but to make it further, the currency pair will need some more drivers including the results of today’s event. If Kamala Harris makes it today, then GBP/USD is likely to jump over 1.3000.

AUD/USD: The Upside is Limited

Today’s US presidential elections will impact all the assets across various markets and AUD/USD is among them. Apart from this event, the currency pair is influenced by the results of the RBA meeting that took place earlier on Tuesday. The central bank made no additional expansionary steps and the head of the RBA, Michele Bullock commented that the bank is likely to be more cautious about the next steps due to the inflation pressure.

Anyway, the Australian dollar looks preferable as compared to the US dollar as the Fed is likely to be more aggressive the next year. However, due to the presidential election in the United States, the current AUD/USD upside is limited.

The currency pair fluctuates above the SMA50 but currently, it is testing 0.6625, from where AUD/USD can make a correction. The upside is likely, but due to elections in the United States, today’s fluctuations may be sharp and the volatility is high. We also expect AUD/USD to test the SMA50 and resume rising from there. 

On the downside, the closest support level is at 0.6580. It prevents the currency pair from moving lower and testing 0.6555.