- EUR/USD trades near 1.1740, having hit a low of 1.1711 in Asia.
- Buyers returned as stocks cheer prospects of less regulation in the US.
- Bond yields continue to favor the US dollar.
The shared currency benefits from the risk-on action in Asian equities and pushes EUR/USD higher to the 1.1740 neighborhood on Thursday.
Investors cheer split US Congress
Contrary to widespread expectations for a Democratic sweep, the US elections held Wednesday have left the Congress deeply split. While the outcome initially triggered risk aversion on Wednesday, investors quickly reassessed the implications and concluded that the divided Congress could mean across-the-aisle cooperation and less regulation and taxes, leading to risk reset in financial markets.
The US stocks advanced on Wednesday, providing positive cues to major Asian indices, which are currently up around 1%. As such, the haven bid for the dollar has weakened, helping currencies such as EUR, AUD, and NZD carve out marginal to modest gains.
The EUR/USD is currently trading 0.15% higher on the day. However, the exchange rate is still trapped within Wednesday’s range of 1.1771 to 1.1602. The immediate bias will remain neutral as long as that range remains intact.
If the risk-on gathers pace, EUR/USD could end up challenging Wednesday’s high of 1.1771. Investors, however, should note that yield differentials continue to favor the greenback. As such, a big EUR/USD rally looks unlikely.
Data wise, the focus will be on the German Factory Orders for September, scheduled for release at 07:00 GMT.
Technical levels
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