After recovering from 1.2760 the EUR/USD, however, lost momentum and stalled just ahead the 200-day SMA, significant resistance level for the cross, which held as support for over 2 months before being broken. At time of writing, the pair is trading at the 1.2815 area, 0.15% above its opening price.
In terms of technical levels, immediate resistances are seen at 1.2825 (200 DMA), 1.2840 and 1.2880, while supports could be found at 1.2800, 1.2765 (daily lows) and 1.2740 (38.2% retracement of the broader 1.2041/1.3172 rally).
On a wider picture, NAB's strategies team believes that U.S. status quo should ease USD. "our view remains that this will mean a modest relief rally for equities with the USD easing a little lower before markets then start to worry about dealing with the fiscal cliff."
In the same line, Senior Currency Strategist at Rabobank Jane Foley, comments “irrespective of the outcome of the US election, market attention will undoubtedly switch immediately to the Fiscal Cliff. It is our view that the negative impulse that will hit the US at the beginning of 2013 means that the Fed will be ready to take further policy action at the December 12 FOMC”.
Rabobank affirms that they maintain their "forecast of EUR/USD at 1.2800 on a 1 mth view before pushing back to EUR/USD1.300 on a 3 mth view”.
Wall Street closes higher on election day
The main US stocks indexes have rallied on Tuesday and have posted a second day of gains. The Dow Jones rallied 133.24 or 1.02% to close at 13,245.68. The S&P 500 advances 11.13 pts or 0.79% to finish at 1,428.39 and the Nasdaq Composite gained 12.27 pts or 0.41% to end the day above the 3k points at 3,011.93.
The day after elections
As for Wednesday, market will focus on the Greek Gov Debt Crisis Vote and market is asking itself What’s the hubbub all about? Richard Lee, FXstreet.com analyst states that "With a general labor strike commencing in Athens and the upcoming Greek austerity vote tomorrow, the EURUSD will provide some great opportunities for traders in the market."
"The upcoming vote involves further austerity plans to be implemented in the Greek economy over the next two years," Lee adds.
Please note that the remaining weekdays investors will pay attention to Thursday's BoE and ECB Interest Rate Decisions with the experts seeing small chance of a ECB rate cut in November, and the BoE introducing additional QE, as well as Chinese Consumer Price Index on Friday.