Markets are awaiting the outcome of the US presidential election where Democratic candidate Joe Biden is currently leading.

Investors rushed to stock up on shares of companies around the world on expectations that Joe Biden will win the presidential race. On Forex, we can observe persistent consolidation in the major currency pairs with the US dollar. However, the emerging market currencies are under significant pressure now. Thus, the Russian ruble continues to trade at the lowest levels since the beginning of this year.

Such prolonged consolidation can be explained by several factors. First of all, these are the presidential race in the US and the economic impact of the coronavirus pandemic on the whole world. On the other hand, markets had long expected new large-scale measures to stimulate the US economy that both Trump and the representative of the Democratic Party Nancy Pelosi promised to adopt. Another reason for the protracted consolidation is the measures taken by other world central banks that seek to weaken their national currencies. This policy is supported by the ECB and the Bank of England which is due to hold its monetary policy meeting today. For example, this week the Reserve Bank of Australia decided to cut its key interest rate from 0.25% to 0.10% and expand the volume of asset repurchases.

Today, apart from the US election results, investors will closely watch the final decision of the Bank of England and the Fed on their monetary policies. Both regulators are expected to leave their interest rates unchanged. Markets also hope that the Fed will maintain the volume of asset purchases and confirm the need for new stimulus measures. Earlier, Jerome Powell, the head of the Federal Reserve System, stressed the importance of the new relief package. The Bank of England is expected to increase the volume of asset repurchases from 725 billion pounds to 825 billion pounds.

We believe that as soon as the topic of the US election comes to an end, investors will again shift their attention to COVID-19 and the economic data. This can help revive the forex market.

Daily forecast

EUR/USD is trading above the level of 1.1730 ahead of the Fed's monetary policy meeting and the outcome of the US presidential election. If the pair holds above this level, we can expect it to rise to 1.1800.

The GBP/USD pair continues to consolidate. The pair is very likely to move upwards within the range of 1.2895-1.3065 until hitting the upper boundary of the channel at 1.3065.