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Forex Today: Markets turn cautious while awaiting US Midterm Elections results

Here is what you need to know on Wednesday, November 9:

As investors keep a close eye on the outcome of the US Midterm Elections, the market mood turns cautious in the early trading hours of the European session on Wednesday. The US Dollar Index recovers modestly while holding below 110.00 following Tuesday's sharp decline and US stock index futures trade in negative territory. September Wholesale Inventories will be the only data featured in the US economic docket and it's not expected to trigger a noticeable reaction ahead of Thursday's key inflation report. The impact of the US Midterm Elections could impact the risk sentiment and drive the currencies' action in the second half of the day.

According to The Associated Press, Republicans currently have 47 seats and Democrats have 46 seats in the Senate. The party with 51 seats, in the end, will have control of the Senate. On the other hand, Democrats have lost 3 House seats and currently have 159, against 190 seats by Republicans. 218 seats are needed to gain the majority in the House.

US Midterm Election Update: Republicans leading in tight contests.

Source: The Associated Press

Wall Street's main indexes registered strong gains on Tuesday and the US Dollar continued to weaken against its rivals with the US Dollar Index falling to its weakest level since late September below 109.50. Meanwhile, the benchmark 10-year US Treasury bond yield holds steady above 4.1% despite having lost more than 2% on Tuesday.

EURUSD preserved its bullish momentum and closed the third straight trading day in positive territory on Tuesday before going into a consolidation phase below 1.0100. European Central Bank (ECB) policymaker Joachim Nagel said on Tuesday that large rate hikes are still necessary for the eurozone and ECB Vice Vice President Luis de Guindos noted that quantitative tightening will start "sooner or later," helping the Euro hold its ground against the US Dollar.

GBPUSD took advantage of the broad-based selling pressure surrounding the US Dollar and climbed above 1.1600 for the first time in 10 days on Tuesday. The pair, however, lost its traction and retreated below 1.1550 early Wednesday.

Fueled by the sharp decline witnessed in the US T-bond yields, Gold price gained more than 2% and reached a fresh multi-week high above $1,710 on Tuesday. XAUUSD consolidates its weekly gains but holds comfortably above $1,700.

USDJPY extended its weekly slide and broke below 146.00 on Tuesday. The pair stays relatively quiet early Wednesday and fluctuates above 145.50.

Bitcoin lost nearly 10% and slumped to its weakest level since mid-June at $17,500 on Tuesday. Although BTCUSD managed to erase a portion of its losses later in the day, it failed to stage a convincing rebound and was last seen losing 1% on the day at around $18,300. Ethereum fell 15% on Tuesday and is already down 3% early Wednesday, trading slightly below $1,300.

Binance acquires FTX to bring an end to FTT-induced FUD.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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