Despite a slight decline during the Asian trading period on Tuesday, the US dollar is still holding on to its highest level in two and a half months amid expectations that the Fed will adopt a deliberate approach to lowering interest rates, and the election battle is very close and makes investors nervous.
Treasury yields also remained high with the current strength of the dollar, which caused pressure on the yen, euro and pound sterling, as data showed that the US economy is doing well, which led traders to reduce their bets on large and rapid interest rate cuts by the Fed.
The CME FedWatch tool also showed that markets expect an 87% probability of a 25 basis point interest rate cut by the Fed next month, and a 13% probability of no cut.
Traders expect 41 basis points of easing for the rest of the year, as the Fed began its rate-cutting cycle by cutting 50 basis points in September.
With the approach of the US elections, which will be only two weeks away, specifically on November 5, as the elections remain very close and close between the candidates, however, the increasing likelihood of former President Donald Trump's victory is currently strengthening the Armenian dollar, as the proposed tariff and tax policies are seen as likely to keep US interest rates high.
If Harris wins, it will reflect the status quo, and she is likely to continue with existing policies and involve a slower-moving process of policy shifts.
