Johnson Wins, USD Index On The Bull

Tuesday has been a live forex session, featuring directional moves from the EUR/USD, USD/CAD, and USD/JPY. Following Monday’s doldrums, trading ranges have opened up, producing a bullish move in the USD Index. At least for the moment, the victory by new U.K. Conservative party head Boris Johnson is generating interest in the Greenback.

Ultimately, Johnson’s win came as little surprise to the markets. He was an overwhelming favorite to prevail amid growing uncertainty over the Brexit transition. However, upon the news becoming official, the notion of a “no-deal” U.K. exit from the E.U. gained legitimacy. Thus far, currency traders have favored the Greenback over most other majors including the Euro and GBP.

September USD Index Futures Rally

The early U.S. session has brought a furious rally to September USD Index futures. Rates have driven above the 97.250 level ― are new yearly highs in the cards by month’s end?

Here are the levels to watch in the USD Index for the near future:

• Resistance(1): Swing High, 97.715
• Support(1): Bollinger MP, 96.640

Overview: Today’s election of Boris Johnson as the new U.K. Prime Minister has lifted a bit of uncertainty toward Brexit and the GBP. However, the idea of the U.K. leaving the E.U. with or without a divorce deal in place has currency traders favoring the USD. At least for the time being, it looks like the Greenback is the leading beneficiary of Johnson’s win.

Perhaps the largest takeaway from today’s U.K. election is the potential trade affiliations with the United States. It is no secret that Johnson was Trump’s favorite for P.M. ― upon his election, unilateral U.S./U.K. trade deals and economic partnerships have become much more probable. While the timetables for such agreements remain vague, be on the lookout for breaking news in this area ahead of the October 31 Brexit Day.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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