**Forex Market Overview: Dollar Weakens Ahead of U.S. Presidential Election**

**TOKYO (Reuters)** – The forex landscape experienced a shift on Tuesday as the U.S. dollar weakened in anticipation of the presidential election results. Traders adjusted their positions following recent opinion polls that cast doubt on Republican candidate Donald Trump’s chances of victory. This has prompted a reevaluation among market participants, leading to fluctuations in currency values.

Recent trends showed Democrat Kamala Harris gaining momentum in electoral betting markets, with her odds improving significantly. According to the latest figures from PredictIt, Harris held a slight edge, although other platforms like Polymarket still designated Trump as the frontrunner. Analysts had previously favored Trump due to his tariff and immigration policies, which are believed to drive inflation and consequently elevate U.S. Treasury yields and the dollar.

However, the dollar encountered a downturn, decreasing by as much as 0.76% against the euro, hitting a three-week low, just after a survey indicated Harris had an unexpected lead in Iowa—a state traditionally favoring Republicans. The dollar index, measuring the currency against six major peers, slipped to 103.89 at 0618 GMT, after hitting a low of 103.67 on Monday, reflective of market nervousness as polling data continues to depict a closely contested race.

The euro gained ground, trading at $1.0879 after previously reaching $1.09145, marking a robust rebound. The British pound also edged higher to $1.2959. In contrast, the dollar fell to 152.34 yen, touching a weekly low of 151.54 earlier.

Carol Kong, a currency strategist at Commonwealth Bank of Australia, noted that markets currently appear to be pricing in a potential win for Harris. She speculated that the dollar could decline modestly by 1%-2% this week should Harris secure victory, while Trump’s win could uplift the dollar substantially. Added uncertainty regarding potential delays or disputes in vote counting could lead to increased volatility in currency markets.

Despite the expectation of a quick resolution, analysts highlighted that the election outcome may not be clear for several days after the voting concludes. Trump’s previous assertions hint at possible contestation of results, reminiscent of the aftermath of the 2020 elections.

In cryptocurrencies, Bitcoin experienced a resurgence, climbing 2.2% to around $68,542 after dipping to a one-week low of $66,776.19. Analysts suggest that Trump may be perceived as more favorable for cryptocurrencies compared to Harris.

TD Securities analysts expressed varying scenarios based on election outcomes—anticipating a bullish effect on the dollar with a Trump win, while a “Blue Wave” led by Harris could significantly depress the dollar’s value. They indicated that a Harris victory wouldn’t be entirely negative for the dollar in the medium term, as it would redirect focus back to macroeconomic factors.

On the economic calendar, the Federal Reserve is anticipated to announce a 25 basis points rate cut on Thursday. Attention will be on any indications that the central bank might skip a December cut, following last week’s jobs report which revealed disappointing employment numbers for October, questioning the robust nature of the labor market.

Several other central banks are also expected to make policy announcements on Thursday, including a 25 basis points cut from the Bank of England and a 50 basis points easing from Sweden’s Riksbank, while Norway’s Norges Bank is likely to hold rates steady.

The Reserve Bank of Australia maintained its policy rate on Tuesday, as expected, retaining a cautious stance on inflation. RBA Governor Michele Bullock acknowledged ongoing inflationary pressures, suggesting that pressure remains for restrictive monetary policies until inflation is sufficiently managed.

The Australian dollar rebounded, gaining 0.21% to $0.6600 after having plunged to its lowest level since August last week. HSBC’s chief economist for Australia and New Zealand indicated that the timeline for any RBA rate cuts might extend, possibly beyond 2025, due to persistently slow declines in domestic inflation.

As the market navigates a volatile week, forex traders should closely monitor election outcomes, central bank decisions, and economic indicators that could significantly impact currency valuations in the days ahead.