Search ForexCrunch

Incumbent Barack Obama seems to be close to clinching a victory on challenger Mitt Romney, yet the race is not over. Update: NBC projects that Obama is re-elected.

EUR/USD is now trading at 1.2860, up around 80 pips from the lows seen earlier in the election night. It fell short of resistance at 1.2880. There are reasons to doubt that this could change.

Out of 8 swing states, Obama is projected to win in New Hampshire, Nevada, Iowa and Wisconsin.  Romney is winning North Carolina and isis predicted to take Virginia and . Obama is leading in Ohio. Colorado is all open.

A very close race is held in Florida, where Obama has a narrow lead of less than one percent, with 35K.  In the current situation, Obama may not need to carry Ohio or any big states to win.

There was a debate regarding the impact on the dollar: at the moment, a victory for Obama seems to weaken the dollar due to a harder time resolving the cliff.

However, there are good reasons to argue that this will turn around, as also explained in the preview  How to Trade the US Presidential Elections with EUR/USD.

Let’s see:

  • No change in Congress: The Democrats are set to keep the Senate and Republicans are set to keep the House. We’ve seen Obama and Republicans have trouble getting along.
  • Popular vote: In this race, Mitt Romney could still win the popular vote but lose the White House. This looks realistic.
  • Stock futures are lower: The dollar and stocks usually go in different directions.
  • Greece is still in trouble: There’s no new hope on that front. Here are 5 reasons why Greece could leave the euro-zone now.

All these could change the atmosphere and turn it into a “risk off” one, which will push the dollar higher and the euro lower.

For more, see the EUR/USD forecast.