This week, there should be two events that can determine the further movement of the US currency. We are talking about the upcoming elections to the US Congress and the next meeting of the Federal Reserve, which will be held on Thursday.
It should be noted that the so-called “midterm elections” usually do not have a significant impact on the markets, but this time, largely because of the contradictory policies of the White House, they have become an extremely important event.
According to recent polls, there is still a high probability that Democrats can take control of the House of Representatives, and Republicans can maintain a majority in the Senate. However, the parties are now almost nostrils in the nostril, so the balance of political forces in the US parliament may be unpredictable.
Experts predict that if Democrats gain the majority of seats in the House of Representatives, then EUR / USD may rise to the level of 1.15, and USD / JPY, on the contrary, may decline to the level of 112. If the Republicans manage to keep control over Congress, then USD / JPY may rise to 114, and EUR / USD to sink below 1.13.
At the same time, it is not likely that the elections will have a long-term impact on the dollar exchange rate, since investors will quickly turn their attention to the prospects for US monetary policy.
It is assumed that at the next meeting, the Fed will leave the interest rate unchanged and announce its further plans to tighten monetary policy. Thus, the impact of this event on the dollar will be temporary and limited.
The material has been provided by InstaForex Company – www.instaforex.com