How the USD Turned Flimsy, What Experts Won’t Tell You

Welcome to the Currency Rollercoaster

Grab your popcorn, folks, because it’s Election Day and the market is already getting nervous. The USD, which was riding high on previous bets, has taken a bit of a dive lately. But don’t worry, we’re not just talking about the numbers—we’re diving into what makes it tick and how you can stay ahead of the curve. Expect surprises, ninja tactics, and a dash of humor, because we’re about to demystify how a simple election day decision can have this much impact on the global markets.

Let’s start with the reality of the situation: everyone knows the USD is kind of the lead actor in the whole financial movie. When it gets shaky, all the supporting currencies start acting up—sometimes, with Oscar-worthy performances.

But why is the USD so soft today? If you’re thinking about the election and asking, “Why would political drama send the dollar into a fit?”, congratulations—you know how to state the obvious. With the odds of a Trump victory dwindling and the market’s retraction on what we’ve lovingly called “Trump trades,” the dollar is caught in a delicate tango between uncertainty and calculated guessing. Now let’s unpack how each currency reacted in response.

EURUSD: The Near-Miss 1.09 Saga

If you’re a fan of close calls, EURUSD just gave us a teaser. Monday’s climb to 1.0914 was almost heroic—like trying to dunk a basketball and just barely missing the hoop. That 1.09 handle remains elusive, and it’s giving traders sleepless nights.

The hidden gem here is that we’re actually seeing sentiment-driven price action. The euro gets to act fancy, pretending it’s standing firm against the dollar, but what we really have is a reactive bounce—more bark than bite. The real insight here? Look out for the underlying sentiment shifts post-election. Sometimes, markets play the quiet game before showing their true colors.

GBPUSD: Stuck in “Almost-Land”

Good ol’ GBP had an exciting Monday too. It crept up to 1.2998 before dramatically sighing and saying, “Nah, maybe another time.” Almost breaking through 1.30, it seems to be a running gag with this pair. The sub-1.30 fight hints that while GBP wants to bask in bullish glory, it’s still too polite to make any grand gestures.

You know what would spice this up? Adding some unconventional tricks to the GBPUSD trading playbook: think small timeframe breakouts, and buy stops just above that 1.30 handle to catch the stampede that’s likely the second someone yells, “We broke it!” in the trader’s room.

JPYUSD: The Subtle Player That’s Not Subtle at All

Ah, the Japanese Yen. Unlike the flashy EUR and GBP, JPY is quietly observing from the corner. It doesn’t do much until there’s a very good reason. Think of it like a cat in a room full of noisy children—if it moves, you know something’s up. Currently stuck between 152.10 and 152.55, it’s waiting for USD’s next move before making any drastic decisions. So what’s the play here? Simply put: patience.

The “ninja tactic” is to watch USDJPY, as it’ll likely make its move post-election—and given how JPY loves to flip the tables suddenly, get ready for a breakout either way. Put those alerts up.

Antipodeans: When Being Down Under is Actually a Power Move

We can’t forget the Australian Dollar (AUD) and New Zealand Dollar (NZD) in this drama. They’ve both shown strength thanks to China’s encouraging Services PMI data overnight. The takeaway here? The Chinese economy might not wear a cape, but it can still influence our favorite down-under currencies like a superhero in disguise.

PBoC Setting USD/CNY Mid-Point

Now, a quick word about the People’s Bank of China (PBoC), which decided to set USD/CNY at 7.1016, not far off market expectations. Okay, let’s decode this, because most people see these numbers and get a headache.

The PBoC has a funny way of letting the world know that they’re still keeping everything tightly under wraps. By setting a rate in line with expectations, it’s signaling, “Nothing to see here, move along.” This is actually a hidden gem that many traders miss: when the PBoC isn’t actively deviating from the expected, it’s a sign that they’re confident—or at least, pretending to be—about the direction of their currency’s valuation.

Ninja Tactic Playbook for Today’s Market:

1. Wait for Confirmation: This isn’t the time to pick a side before the dust settles on the US elections. The DXY sandwich between Monday’s low and the 200DMA is proof that price discovery is still in limbo.
2. Antipodean Cues: Traders keen on riding AUD or NZD should remember the old adage: “Follow the dragon to the prize.” If China’s doing well, AUD and NZD will catch the scent.
3. GBPUSD Breakout Play: Don’t sleep on GBPUSD’s penchant for theatrics around big numbers. Keep stops tight and stay awake—there’s a good chance Cable likes drama as much as the rest of us do.

Key Takeaways

• The USD is a tad weak due to US election jitters, making major currency pairs a bit more interesting.
• EURUSD and GBPUSD had their moments, but couldn’t quite reclaim those juicy psychological levels.
• JPY is playing “wait-and-see,” which is code for “brace for action.” USDJPY could break out post-election, whichever way the result tilts.
• AUD and NZD are thriving on the back of China’s solid data—hinting that the dragon is still very much awake.
• PBoC did a quiet move by keeping the CNY in check, signaling confidence (or a good bluff). Traders should watch Chinese economic indicators to gauge market mood swings.

The Final Word

With election fever gripping the USD by the scruff, Forex traders need to look beyond the obvious—watch for breakout moves in pairs like USDJPY and those oh-so-tempting near-handles in EURUSD and GBPUSD. There’s always more happening behind the scenes than meets the eye, and today’s election plays are no different.

Ready to make the next move? Don’t be caught napping—the best traders already have their game plans set, and if you’re wondering where to start, our community is here for exactly that. If you want to move beyond merely watching the show and actually be in it, join our community for exclusive insights and daily alerts at StarseedFX Community Membership.

—————–
Image Credits: Cover image at the top is AI-generated