US Dollar eases as US presidential election gets underway

• US Dollar retreats as United States election uncertainty offsets upbeat service sector data.
• ISM Services PMI surges, signalling accelerating growth in the sector despite ongoing political concerns.
• Trump's election odds affect US Dollar amid expectations of inflationary policies.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, retreats as uncertainty surrounding the upcoming US presidential election dampens gains from upbeat service sector data. Despite a surge in the ISM Services PMI indicating robust growth, concerns over the election outcome weigh on the Dollar's strength. 

The US Dollar Index has recently declined due to increased probability of Kamala Harris winning the US presidential election and a disappointing October Nonfarm Payrolls (NFP) report released last week. The weak job growth data, despite rising wage inflation, has raised expectations of a less hawkish Federal Reserve (Fed) stance. In the meantime, markets are pricing in a 25-basis-point rate (bps) cut by the Fed this week, which could further weaken the US Dollar.

Daily digest market movers: US Dollar down as US presidential election commences

• US Dollar faces selling pressure as attention shifts toward the US presidential election.
• ISM Services PMI for October exceeded expectations, indicating accelerating growth in the US service sector.
• The ISM Services PMI rose to 56 from 54.9 in September. This reading came in above the market expectation of 53.8.
• Prices Paid Index, a gauge of inflation, eased slightly, while the Employment Index improved.
• Concerns over political uncertainty rose among businesses, as per the ISM survey.
• Markets anticipate a 25 bps rate cut from the Fed next week and another in December.
• Investors speculate that a Trump victory could support the US Dollar due to his inflationary policies.
• There are no Fed speakers this week due to the media blackout ahead of the November 6-7 FOMC meeting.

DXY technical outlook:  Bearish momentum grows, support at 103.50

The DXY index is consolidating, possibly indicating a retest of the 200-day SMA support at 103.50. The Relative Strength Index (RSI) is sloping downwards, escaping overbought territory. The Moving Average Convergence Divergence (MACD) is indicating lower green bars, further hinting at a potential retracement. 

Key support levels to watch are 103.30 and 103.00, while resistance levels are found at 104.00, 104.50 and 105.00.