FX Daily: Blue wave price action a preview of what’s to come
At a Glance
The ING FX desk reads the overnight blue-wave price action as a preview of the 2027 dollar regime: short-dated US rates and the dollar sold off, equities reclaimed 2-3% losses, and USD/CHF and USD/JPY reversed roughly half of their 1% early-Asia declines, per the full note from ing-think. The desk's core point is that a Democrat-controlled Congress is unlikely to slow AI capex in the near term, so the initial risk-off impulse has already faded — but the episode establishes the template for how markets will trade political headlines into 2027. Against that, our cross-firm consensus for EUR/USD sits at 1.1500 Dec-26 (spot 1.1253), with USD/CHF at 0.7800 and USD/JPY at 156.00, so the desk's dollar-negative framing is directionally consistent with consensus but stops well short of the more hawkish dollar calls. No high-impact events are scheduled in the next 30 days in this jurisdiction, so positioning and political headlines are the marginal drivers.
Key Takeaways
- 01The overnight blue-wave price action reversed most of its initial move — US two-year yields dropped 8-9bp then retraced, and USD/CHF and USD/JPY recovered roughly half of their 1% early-Asia declines.
- 02The desk treats this as a preview of 2027, not a regime change, because Democrats do not take office until January and President Trump has accepted the results.
- 03Our EUR/USD Dec-26 consensus sits at 1.1500 (range 1.1162-1.2000) versus spot 1.1253, so the median already leans dollar-negative — the desk's thesis is a consensus view, not a contrarian one.
- 04The bullish EUR/USD tail is **commerzbank** and **cibc** at 1.2200; the bearish tail is **hsbc** at 1.1000 and **lloyds** at 1.1200 — the desk's call only outperforms if the high end is right.
Full Analysis
What the desk is arguing
The desk frames the overnight move as a template for 2027: a Democratic sweep of the House, Senate, and key governorships (Texas, with Gina Hinojosa campaigning on a data-centre moratorium, and Michigan's Senate seat trending progressive via Abdul El-Sayed) briefly hit AI-sensitive assets, with Korea and Taiwan equities down 3-4% and US two-year yields dropping 8-9bp before retracing most of that move.
Per the full note , the reversal owes to two things: the Democrats do not take office until January, and President Trump has accepted the results — removing a wild-card downside risk for the dollar. The desk's evidence is the round-trip itself: USD/CHF and USD/JPY recovered roughly half their 1% early-Asia fall, and equity futures have reclaimed the 2-3% overnight losses.
The alternative read — that a new Congress would credibly threaten AI capex and force a sustained dollar-negative repricing — is implicitly rejected by the desk's framing. It treats the episode as a preview rather than a regime change, which is why the price action reversed rather than extended.
Where it sits in our coverage
Our cross-firm consensus for EUR/USD is 1.1500 for Dec-26, with a range of 1.1162 to 1.2000, against current spot of 1.1253. The dispersion is wide: commerzbank at 1.2200, cibc at 1.2200, and nomura at 1.2000 sit at the bullish extreme, while hsbc at 1.1000 and lloyds at 1.1200 anchor the low end.
On USD/CHF the Dec-26 consensus is 0.7800 (range 0.7600-0.8200) versus spot 0.7811, with deutschebank and goldman at 0.7500-0.7600 at the low end and citi at 0.8300 the clear outlier on the weak-franc side. USD/JPY Dec-26 consensus sits at 156.00 (range 140.00-163.00) against spot 155.82, with scotiabank at 140.00 the most yen-bullish and nomura at 165.50 the most yen-bearish. The desk's dollar-negative read aligns with the consensus median on EUR/USD and USD/CHF, but the 1.2000 bullish EUR/USD tail is where the desk's thesis would have to land to be actionable.
How other firms see it
Aligned: commerzbank, cibc, nomura, and rbc all hold EUR/USD Dec-26 targets of 1.1800-1.2200, effectively endorsing the view that dollar downside is the higher-probability path through 2027. rabobank at 1.1800 and bnpparibas at 1.1400 sit closer to consensus, reinforcing the framing.
Contrary: hsbc at 1.1000 and lloyds at 1.1200 are the standing counterweight on EUR/USD, and on USD/CHF citi at 0.8300 and on USD/JPY nomura at 165.50 and mizuho at 163.00 imply a much firmer dollar than the desk's thesis requires. Watch the EUR/USD trajectory as a mirror of the ECB rate path, and USD/JPY as the spillover proxy for any renewed risk-off from political headlines.
What the calendar says
No high-impact events are scheduled in this jurisdiction over the next 30 days, so the desk's preview is not going to be tested by a near-term data print. The next meaningful catalysts are the January 2027 handover of Congress and the subsequent AI-capex commentary from firms exposed to Texas and Michigan policy risk — both beyond the calendar horizon.
Market Implications
Watch EUR/USD at 1.1253 versus the 1.1500 Dec-26 consensus — a break above the March-26 median of 1.1700 would confirm the desk's 2027 preview is being priced forward. USD/CHF at 0.7811 is essentially at the 0.7800 Dec-26 consensus, so the near-term trade is to watch whether the SNB or the AI-capex narrative drives the next 50 pips. USD/JPY at 155.82 sits inside the 149.00-161.71 March range, with the positioning signal being whether the 1% early-Asia move gets rebuilt on the next political headline.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Rabobank | Bearish | 1.1000 |
ING | Bullish | 1.1300 |
MUFG | Neutral | 1.1200 |
From the original
Articles FX Daily: Blue wave price action a preview of what’s to come Published 07:45 FX Translate Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download For a change, opinion polls proved correct, and the Democrats delivered a stunning victory in the US mid
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