The USD index receded some ground ahead of key US data releases due later today 

The euro climbed to one-week highs around 1.1770 earlier in the day but was quickly rejected and turned negative as the safe-haven greenback demand picked up after President Trump said he was getting ready to celebrate a big win. As a result, US stock index futures turned red while European stock markets opened lower on Wednesday. 

Still, after the initial dip to the 1.16 handle last seen in July, the common currency managed to trim intraday losses and has settled around 1.1680, just above the 100-DMA in recent trading. As market focus remains on the US elections, short-term volatility in USD pairs and in the global financial markets, in general, will likely stay elevated this week.

USD index registered fresh peaks beyond the 94.00 handle and continued to post strong gains, having reversed yesterday’s negative price action. At the moment, Democrat candidate Joe Biden is leading the race but by a small margin. Meanwhile, Trump has already said he plans to go to the Supreme Court after calling the election a fraud. Against this backdrop, the greenback demand will likely persist as risk aversion could prevail amid uncertainty.

Of note, the USD index receded some ground ahead of key US data releases, with today’s calendar including the ADP report, balance of trade figures, and the ISM non-manufacturing. As a reminder, the Federal Reserve meeting concludes on Thursday while the key NFP employment report is scheduled for Friday. However, these events could stay nearly unnoticed as the market focus is on the election results. 

In the immediate term, EURUSD needs to hold above the 100-DMA in order to further trim losses, but if the dollar stays elevated, the pair will likely see more intense selling pressure, with traders continuing to express nervousness across the board. On the upside, the key significant hurdle for euro bulls is represented by the 20-DMA, today at 1.1755.


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