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EUR/USD has been experiencing high volatility as the US presidential elections are yet to be decided. Euro set to resume falls as elections enter contested territory and the longer the race extends, the better for the safe-haven dollar, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“President Donald Trump has outperformed opinion polls with an early clinch of Florida – his newly-adopted home state. A ‘red mirage’ of a Trump win was seen in Georgia, and in several Midwestern states, while a ‘blue mirage’ was seen in North Carolina, Texas, and Ohio.” 

“A contested election is the markets’ worst scenario. Even if the networks call winners in states and a victor in the presidential elections, lawyers are already gearing up for legal fights. Recounts could be called if races are within razor-thin margins, further prolonging the process.” 

“Investors originally preferred a ‘blue wave’ that would see Democrats winning the Senate in addition to the White House. However – at least for now – Republicans seem to hang onto seats in North Carolina and Maine, thus retaining control. In this outcome, there is room for a change of heart for markets – potentially preferring Trump.” 

“In Europe, coronavirus cases continue rising at a worrying rate, yet no new lockdown measures are announced. In America, the ADP private-sector Non-Farm Payrolls and the ISM Services Purchasing Managers’ Index are set to print robust figures. Both serve as hints to Friday’s Nonfarm Payrolls, yet market attention is directed at the states.”

“Euro/dollar volatility has exploded, and as the just settles, bears remain on top. Support awaits at 1.1650, which served as support last week, followed by 1.1620 and the fresh low of 1.16. Resistance is at 1.1710, a swing high from last week, followed by 1.1720 and 1.1770, the latter being the election night high.”