- Biden win held as broader negative for USD

- But USD strengthens at start of the week

- Analysts say covid-19 to come back to the fore as key concern

Above: Joe Biden. Accessed: Flickr, Credit: jlhervàs

GBP/USD spot rate at time of publication: 1.3144Bank transfer rate (indicative guide): 1.2784-1.2876FX specialist providers (indicative guide): 1.2940-1.3026More information on FX specialist rates hereStock markets are higher at the start of the new week, but foreign exchange markets are looking a little more indecisive on news that Joe Biden became the President-elect of the United States, ending weeks of uncertainty concerning the outcome of the vote.

Analysts are broadly of a view the Biden win should pose downside potential for the U.S. Dollar over coming weeks and months. Indeed, EUR/USD and GBP/USD have touched over 2-month highs at the start of the new week as a result.

"At least the market has a narrative: A Democrat President who doesn't control the Senate, will be less combative on trade, but will be more limited where fiscal policy is concerned. This leaves a bigger role for the Federal Reserve, which means even lower rates for longer, even more QE for longer. So the dollar is weaker, spreads are tight, equities have rallied around the world this week and volatility is (even) lower than it was," says Kit Juckes, foreign exchange strategist at Société Générale.

But, at the time of writing the Dollar is making something of a comeback, which confirms that expecting further Dollar weakness at this juncture is by no means guaranteed.

The Pound-to-Dollar exchange rate is trading a third of a percent lower at 1.3136 while the Euro-to-Dollar exchange rate is trading 0.14% lower at 1.1876. If you are looking to make an international payment and would like to discover what tools are available that might help mitigate currency volatility risks, or might help deliver a better exchange rate, please see this explainer here.

Covid-19 will now fall back to being the market's prime focus, and on this front a hard winter awaits, providing ample prospects for a Dollar rebound.

"Given the mounting pandemic in the US, the market could start to focus back on the need for fiscal stimulus. It is unclear if even a limited US fiscal bill will be forthcoming before the inauguration in January," says Alvin T. Tan, a strategist with RBC Capital Markets.

Data shows that in the U.S. the infection curve continues to point steeply upwards with a 7-day average of new infections per 100,000 inhabitants rising to 32 on Sunday.

"The next few months are gearing up to be tough and as long as economies continue to run at reduced capacity, the chance of a swift economic rebound continues to fade. Ahead of the US election, the Euro was under significant selling pressure amid the European lockdown concerns and growing expectation that the Eurozone economy faces another costly downturn. The outlook in currency markets is unclear as a result because demand for safe haven assets could swell if pandemic woes start to overshadow the post-Trump world," says George Vessey, Currency Strategist at Western Union.

According to data out of Europe France continues to see a surge in cases with 90K positive tests being reported on Saturday. The infection rate is now above 80 and every fifth test has come back as positive.

"The situation in hospitals is becoming increasingly tense. In the last seven days, almost 20,000 corona patients have been admitted. Of these, 3,000 required intensive medical treatment," says Bernd Weidensteiner, Senior Economist at Commerzbank.

With the trajectory of the virus still tilted to the upside in some of the world's most important economies, demand for the Dollar and its fellow safe-havens might yet persist.

"The JPY, CHF and USD have all been sold aggressively over the past week, but these safe haven currencies could significantly rebound if global risk aversion resurfaces,” says Vessey.

The outlook for the Dollar therefore looks to be aided short-term by the potential for rising unease over the covid-19 pandemic, but longer-term the prospect of further weakness is being held as a likelihood.

"We thought a risk-on tone would strike with a vengeance as uncertainty diminished after the U.S. election, and ithas. So here we are, at the end of "Election Week", and investors have received enough information to relieve their fears of everlasting uncertainty," says Matthew Hornbach, economist at Morgan Stanley. "With uncertainty in decline, investors can focus on making money for their clients, which means taking risks and putting money to work. And there is a lot of money thatneeds to find some yield."

"We remain bearish on the USD, selling vs AUD, GBP, CAD, NZD," adds Hornbach.