Worried about this stock-market selloff? Relief may be coming after the midterms — no matter who wins.
Market watchers are looking for signs of stability amid stock market turbulence, particularly in the context of the upcoming midterm elections. Historically, the S&P 500 has shown a tendency to rally in the months following Election Day, with an average return of 15.5% between November and June since 1950. This historical trend could influence expectations for both the equity and foreign exchange markets, potentially leading to risk-on sentiment. Traders may react favorably to any signs of political clarity, regardless of the actual election outcome.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). The potential for a post-election rally could align closely with a stronger risk appetite, suggesting that traders may start to position for a bullish Euro against the USD in the coming months.
How firms align
JPMorgan's forecast aligns with this bullish outlook, targeting 1.10 by March 2026, indicating confidence in a favorable post-midterm scenario. Conversely, BofA takes a more cautious stance, projecting a lower target of 1.04 in the same timeframe, reflecting their doubts about sustained momentum.
What the data shows
Recent analyses highlight that historical patterns could see the Euro appreciating against the Dollar following the elections, especially if any political uncertainty dissipates. This could further corroborate our analysis presented in /research/market-outlook.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Post-midterm rallies historically average 15.5% in equities.
- 02FX traders may pivot towards risk-on strategies as elections conclude.
- 03Key resistance for EUR/USD sits at 1.10—watch market sentiment closely.
Market implications
Traders should monitor the EUR/USD around key psychological levels and news surrounding the midterm elections. Our consensus number of 1.075 will shape market expectations as clarity unfolds post-election.
Risks to this view
Should the elections result in a severely divided government, leading to ongoing uncertainty or policy paralysis, this could shift market sentiment negatively, invalidating a bullish outlook on the Euro.
Sentiment by currency
USD~EUR~JPY~GBP~Composite USD score: +0.00
Sources & References
How we cover this story