EUR/USD is taking a bull breather, having rallied by 0.84% on Thursday to register the biggest single-day percentage gain since June 4. The pair is currently trading largely unchanged on the day near 1.1824 but is up over 1.5% this week.
Indecisive price action
The pair swung both ways during Friday’s Asian session, printing a high and low of 1.1847 and 1.1795, respectively, and is flatlined while heading into the London open. As such, the daily candle has taken the shape of a classic Doji candle, which implies indecision in the market place.
Both buyers and sellers are refusing to lead the price action, seemingly due to continued US election uncertainty. While Democrat Joe Biden has inched closer to the White House, the jury is still out on the final outcome, with votes still being counted in five key states of Pennsylvania, Georgia, Nevada, Arizona, and North Carolina.
Besides, Congress looks to be heading for a split. According to Reuters, investors expect Democrat Joe Biden to beat President Donald Trump and the Republicans to retain control of the Senate. That would allow Republicans to block Biden’s plans to raise corporate taxes and deliver a massive fiscal spending package.
That said, the probability of the current indecisive price action ending with a fresh bullish move is high, as Federal Reserve (Fed) has the ability and is willing to do the heavy lifting if the split Congress fails to deliver sizeable stimulus. The central bank reiterated the dovish stance on Thursday and expressed willingness to do more if required.
The confidence in the Fed is one of the big reasons for the dollar’s decline seen in the past 24 hours or so. The greenback had picked up a bid during Wednesday’s Asian trading hours after President Trump’s victory in Florida dashed hopes of a Democratic blue wave. However, the gains were short-lived as focus quickly shifted to the dovish Fed expectations.
US NFP eyed
Apart from US elections, the pair could take cues from the US Nonfarm Payrolls data, due at 13:30 GMT, which is expected to show the economy added 600K jobs in October following September’s 661K additions. A big miss on expectations would bolster dovish Fed expectations and may accelerate the sell-off in the US dollar. The German Industrial Production for September, due at 07:00 GMT, could also influence the pair, although the lagging data rarely yields big moves.
Technical levels
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