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In general, the markets were calm, but today's trading day in America and subsequent ones may stir up investors who are in post-holiday hibernation. It has already become known that the Democrats took one seat in the US Senate from Georgia and pulled ahead in the race for the second. Thus, they came closer to controlling the upper house.
The Senate, controlled by the Democratic Party, will contribute to global economic growth, and therefore will be a positive event for risky assets. Against this background, the dollar will feel the negative dynamics, as the US budget and trade deficit will greatly increase.
It is possible that the final results of the elections in Georgia will be known on Wednesday. However, given the rigidity of the calculation, the official results will be published later. Market players know from the presidential election in November that it may take several days to get a final result. Until there is clarity in the markets about the Georgia election, the dollar will not feel a strong momentum. As soon as the first bets on a particular scenario are placed, the general reaction of the players will follow, which means that we will see an impulse.
Once again, the GOP victory is positive for the dollar, while the Democratic victory is negative. Some strategists assume a drop in the dollar if both Senate seats in Georgia go to Democrats.
The dollar index on Wednesday morning trading fell to the lowest level since April 2018, at the opening of the US session, the downward trend continued. The greenback continues to aim for the 88.2 support level
In addition, the dollar sank to a 6-year low against the Swiss franc, at 0.8760.
The euro continues to take advantage of the weakness of the dollar. The main tandem of the Forex market is firmly entrenched in the area of the 23rd figure. Against the background of a further decline in the greenback, the euro is quite capable of conquering new heights. At the moment, it is assumed that the pair can reach the level of 1.28 by the end of the year.
"We did not expect the Democrats to win this election. Now the weakness of the dollar, which is expected this year, will become more justified," analysts at MUFG wrote.
Similar to the euro, the pound's growth at present is not due to its own strength, but due to the decline of the dollar. The GBP/USD pair managed to gain a foothold above 1.33. On Wednesday, trading was at 1.36, but everything is very shaky here. The pound can break down at any time upon the news of the next restrictions due to the coronavirus and the expectation of economic consequences.
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