Forex markets expected to remain net short US dollar after election

Traders reduced net short dollar positions last week after the greenback moved within the range in October but kept negative bias.

Analysts expects bets against the US dollar to remain or even increase in immediate reaction to the presidential election, despite rising uncertainty over surging coronavirus cases and fresh restrictive measures.

The latest polls show that majority of economists expects the greenback to remain at the back foot immediately after election results, as the latest limited rebound is seen rather as dollar-selling opportunity than reversal.

Economists base their forecasts on expectations of blue wave in which Joe Biden wins the white House and Democrats take control of both houses and on most feared contested election, which would signal prolonged uncertainty and lift safe havens.

The dollar would benefit in case incumbent President Donald Trump getting re-elected along with a continued Republican Senate, but this scenario, according to poll averages is seen as unlikely.