Dollar Index Sees Biggest 1-Day Rally Since Brexit On Trump Victory

The U.S. Dollar Index (DXY) recorded its sharpest one-day rally in over eight years on Wednesday as Donald Trump secured victory in the 2024 presidential election.

This currency-weighted gauge of the dollar – as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP) – jumped nearly 1.8% in early New York trading, marking the steepest rise since June 24, 2016, when the British pound plummeted following the Brexit referendum, sparking a similar dollar spike.

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The dollar surged across the board, with notable gains against the euro, Chinese yuan and Mexican peso amid market concerns over potential U.S. trade tariffs under the Trump administration.

The euro, tracked by the Invesco CurrencyShares Euro Currency Trust (NYSE:FXE), fell below $1.07, down over 2.1% in its worst session since March 2020.

Last week, JPMorgan had projected that a Republican clean sweep could weaken the euro by as much as 8.4%, with analysts citing a potential widening in the U.S.-EU monetary policy gap. Higher inflation in the U.S. may prompt the Federal Reserve to maintain or hike interest rates, while the European Central Bank (ECB) could face pressure to cut rates, analysts said.

The Chinese yuan also took a hit, declining 1.2%, hitting 7.1960 — its largest drop in two years. Trump's promise to impose tariffs as high as 60% on Chinese imports fueled concerns of escalating trade tensions.

“The 7.2000 level is a critical psychological threshold, which, if breached, could prompt intervention by Chinese monetary authorities," highlighted Luca Cigognini, market strategist at Banca IMI.

The Mexican peso was another major losers, slumping 2.7% to its lowest level since August 2022.

"We anticipate that some pragmatism will prevail, with partial reversals in the medium term," said Alejandro Cuadrado, chief market strategist at BBVA.

Meanwhile, the Canadian dollar, though down 0.8% against the greenback, outperformed other major currencies.

"A Republican clean sweep bodes well for U.S. economic growth and Canadian exporters," said Francesco Pesole, foreign exchange analyst at ING Group, adding that Canada's currency remains relatively insulated from U.S.-China tariff dynamics and geopolitical risks under a Trump presidency.

Below is a snapshot of U.S. dollar movements against major currencies as of Wednesday morning:

USD vs.	Last	1-day chg (%)
Mexican Peso (MXN)	20.62843	2.61%
Euro (EUR)	0.9339	2.10%
Japanese Yen (JPY)	154.201	1.71%
Swiss Franc (CHF)	0.87582	1.50%
British Pound (GBP)	0.77760	1.42%
Chinese Yuan (CNH)	7.193730	1.32%
Australian Dollar (AUD)	1.5230	1.14%
New Zealand Dollar (NZD)	1.6818	1.04%
Brazilian Real (BRL)	5.7947	0.76%
Canadian Dollar (CAD)	1.39276	0.75%

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