EUR/USD: Seeing bear-to-bull trend change on projections of split US Congress

• The USD is on the defensive as the US Congress is heading for a split as expected.
• The EUR/USD witnessed a falling wedge breakout in Asia.
• Risk-on in equities could help the EUR confirm the bull breakout on a daily closing basis.

The EUR/USD printed a two-week high of 1.1471 in Asia and was last seen trading at 1.1460 – up 0.30 percent higher on the day.

The American dollar was offered in Asia on fears of split Congress in the US.

As per the latest reports, the Democrats are set to take a big majority in the House and the Republicans are set to retain control of the Senate.

A Democratic-controlled House  paired with a Republican-controlled Senate means President Trump and the GOP may have a hard time enacting new legislation if any. More importantly, a Democratic House may pursue investigations into Trump’s Russian ties, triggering political uncertainty in Washington. This could complicate matters for the Fed.

Hence, the greenback may continue to lose altitude in Europe.  

Further, the JPY crosses are signaling risk-on in equities, which is good news for the EUR and commodity dollars like the AUD, NZD, and CAD.

All-in-all, the pair is likely to confirm a falling wedge breakout – a bearish-to-bullish trend change on a daily closing basis.

EUR/USD Technical Levels