October 30, 2024 at 07:00PM
HSBC anticipates a knee-jerk rally in EUR/USD if Kamala Harris wins the US election, driven by initial USD weakness. However, they expect this rally to be temporary, with the pair likely resuming a downward trajectory as monetary policy differences reassert influence.
Key Points:
A Harris victory is likely to cause a short-term EUR/USD rally, reflecting initial market relief and USD retreat.
The rally may lack durability, as a Harris presidency, especially with a divided Congress, would be seen as maintaining the status quo.
HSBC expects that after the initial rally, factors like relative growth and monetary policy divergence will favor the USD, resuming downward pressure on EUR/USD.
Following October’s sharp drop in EUR/USD, any post-election decline would likely be gradual rather than steep.
Conclusion:
HSBC foresees a temporary boost in EUR/USD on a Harris win, but with limited long-term impact. After an initial spike, they expect relative monetary policies and growth outlooks to favor the USD, leading to a slow and steady decline in EUR/USD rather than an abrupt fall.
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This article was written by Adam Button at www.forexlive.com.
