Trump ascends to power: could EURUSD drop to 1.03, followed by 0.95?

America has voted, and Trump is the new president. He’s also likely to control the Senate and the House, making it possible for him to implement most of his ideas, even the more radical ones.

In the various webinars, articles, and guides we’ve published in recent weeks and months, we’ve noted that a Trump victory would strengthen the dollar, which was evident in EURUSD overnight.

The price fell from roughly $1.0936 to $1.0703. This drop makes sense, given Trump’s aim to cut taxes and boost economic growth, with unemployment already low at 4.1%. Additionally, the latest non-farm payroll report showed that US wage growth is accelerating, and further economic stimulation at this stage will likely drive inflation higher, as there are not enough people around to fill new jobs. Moreover, implementing mass deportations should further drive inflation. This will probably force the Fed to cut rates more slowly, something the bond market has been hinting at in recent weeks as Trump’s win seemed likely. Considering this, and the fact that Trump might also introduce tariffs in 2025, which could further support the dollar – some banks have suggested that EURUSD could fall as low as 0.95 by the end of next year.

In the short term, EURUSD is oversold, and traders will likely look to book profits, which could lift the price. For example, last night, during our live election coverage on ThinkMarkets’ Facebook page, we noted that if EURUSD stayed below 1.0910, a drop would likely occur. Traders who acted on this could have made a risk-to-reward trade of 4 times, risking about 50 pips for a 210-pip return. These short-term traders are probably now booking profits.

Looking ahead, EURUSD has triggered a large wedge pattern with a target of 1.0305 after breaking below last week's low. The wedge pattern on its own isn’t very reliable, but with the election outcome, the likelihood of it playing out has increased. This pattern remains valid as long as the price stays below 1.0830.

EURUSD 3-day chart