How will the US election affect the forex market?

As the 2024 U.S. presidential election is about to be announced, the volatility in the foreign exchange market has increased significantly. The election results will not only affect the policy direction of the United States, but will also directly affect global financial markets, especially the foreign exchange market.

In recent days, the volatility of the foreign exchange market has increased significantly. The implied volatility of the euro against the U.S. dollar and the British pound against the U.S. dollar has reached the highest level since March 2023. Market participants have generally adjusted foreign exchange strategies. , to cope with various potential outcomes. Different candidates represent completely different economic policies and diplomatic positions, and their expectations of victory have injected different trend drivers into the market.

For example, Republican candidates If Trump wins the election, the market generally expects him to adopt tougher trade policies. Although this kind of policy may stimulate U.S. economic growth and attract foreign investment inflows, thus boosting the U.S. dollar, its potential trade protectionist tendencies may also trigger international trade tensions and have a negative impact on the U.S. dollar.

On the other hand, if Democratic candidate Harris wins the election, the market may express concerns about her fiscal stimulus policy. While these policies are designed to boost economic growth, they may also lead to higher inflation and debt levels, putting pressure on the U.S. dollar exchange rate. However, if Harris can win more support in Congress, her policies may also have a positive impact on the U.S. economy, thereby boosting the dollar exchange rate.

Currently, the implied volatility in the options market is rising, reflecting investors' high degree of uncertainty about the outcome of the election. Many investors use options trading to hedge risks, which further increases market volatility. In addition, the outcome of the election will also affect the exchange rate of the U.S. dollar against other major currencies. Especially if Trump implements tougher trade policies, other countries may sell the U.S. dollar, causing the U.S. dollar to depreciate. In contrast, if Harris is elected and promotes international cooperation, it may be beneficial to the international status of the US dollar.

It is worth noting that in addition to the election results themselves, uncertainties during the election process will also have an important impact on the market. For example, a close election may lead to high volatility, while the gradual implementation of post-election policies may lead to new market re-evaluations.

In general, the impact of the US election on the foreign exchange market is complex and multifaceted. Investors should pay close attention to the progress of the election, adjust strategies in a timely manner and manage risks. In this period of uncertainty, sound investment strategies and risk control are particularly important. As a one-stop comprehensive trading platform, 4E supports nearly 20 currency trading pairs such as the US dollar, euro, pound, Japanese yen, Australian dollar, New Zealand dollar, Canadian dollar, and Swiss franc, and provides long and short two-way trading services with up to 1,000 times leverage. This allows investors to respond more flexibly to market fluctuations, and they can trade at any time through their mobile phones simply by holding USDT.

In addition, 4E as The official partner of the Argentina national team, in addition to supporting asset classes such as cryptocurrency, stocks, indices, foreign exchange, gold, etc., it has also launched financial products with an annualized yield of USDT up to 5.5%. The current period can be matched at will, so that the funds are neither idle nor idle. It can wait for market changes and invest flexibly, providing investors with potential hedging options.