• The value of the US dollar continues to rise as market participants predict that Donald Trump will win the presidential election this year.
• Investors expect the Federal Reserve to cut interest rates twice this year.
• Fed Reps. Williams and Bostic are scheduled to speak on Friday.

The US Dollar (DXY), which tracks the Greenback against six major currencies, is increasing its upside potential to nearly 104.30 in Friday’s European session after a keen rebound from a near four-month low of 103.65 earlier this week. The US Dollar (USD) is gaining traction amidst growing speculation that the Republican Party of the United States (US) will come to power in the presidential elections scheduled for later this year.

The assassination attempt on Donald Trump and expectations that US President Joe Biden will drop out of re-election have increased the likelihood of a Republican victory in the election.

Donald Trump is known for promoting restrictive trade policies that reduce the supply of the US dollar on world markets and boost its attractiveness.

Meanwhile, the yield on the 10-year US Treasury bond also rose to almost 4.21%. However, the broader outlook for the US dollar and bond yields remains uncertain as investors believe it is certain that the Federal Reserve (Fed) will begin cutting interest rates in September.

Cooling inflation pressures and risks to the strength of the U.S. labor market have prompted the Fed to bet on rate cuts. According to CME FedWatch, 30-day Federal Funds Futures price data shows investors have priced in a rate cut in September and another in November or December.

Fed officials John Williams, President of the New York Fed Bank, and Raphael Bostic, President of the Atlanta Fed Bank, are scheduled to speak Friday. Investors will be looking for clues as to whether the two expectations for rate cuts are correct.