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EUR/USD has been rising from the lows as US Election Day dawns. The shared currency is set to bounce with Biden and crash in a contested election. Tension is sky-high, as FXStreet’s Analyst Yohay Elam notes. Meanwhile, Tuesday’s 4-hour chart is painting a bearish picture.

Key quotes

“There are two extreme scenarios for markets. The first sees Biden winning an early victory in the south. Enthusiasm to vote may signal people want change. That would seal the battle for the White House and probably lead to Democratic control of the Senate, where the race in North Carolina is critical. A decisive result would weigh on the safe-haven dollar and send EUR/USD surging. On the other extreme, there is a chance that it all comes down to Pennsylvania. The Keystone State could see Trump leading with Election Day ballots while Biden would eventually close the gap. If Trump declares premature victory, the battle could move from the ballot boxes to the courts.”

“A contested election raises chances of a constitutional crisis and violence on the streets, sending investors to the safety of the greenback and plunging EUR/USD.”

“Euro/dollar has exited oversold conditions on the 4-hour chart – the Relative Strength Index topped the 30 level. The currency pair continues trading below the 50, 100, and 200 simple Moving Averages and momentum is to the downside. That leaves room for fresh falls.”

“Support awaits at 1.1650, which was a low point last week. It is followed by Monday’s trough of 1.1620, and then by 1.1610, September’s bottom. Resistance is at 1.1705, a swing high from last week, followed by 1.1720 and 1.1745.”