EUR/USD analysis: USD to retain its crown if Trump does
|EUR/USD Current price: 1.1414
- US Services sector grew at a robust pace in October, EU confidence continues falling.
- US Mid-term elections taking center stage this Tuesday polls point for a Democrat's victory.
The greenback traded with mixed strength through the daily sessions, ending the day mostly lower across the board. Majors, however, traded within familiar levels, as the week will be fulfilled with first-tier events starting this Tuesday with the US Mid-term elections. The EUR/USD pair fell to a daily low of 1.1353 during the London session, on a report suggesting that the EU Commission could impose sanctions on Italy over the budget of this last. The pair bounced quickly from the level and the greenback came under pressure, despite data favored the downside, given that the EU Sentix Investor Confidence index fell to 8.8 from the previous 11.4, while US figures were upbeat. The October Markit Services PMI came in at 54.8 better than the initial estimate ad above the previous 53.5. The Composite PMI was also revised higher, to 54.9, picking up from September 53.9, amid robust expansion in both the manufacturing and services sectors according to the official report. The ISM non-manufacturing PMI for the same month resulted at 60.3 beating expectations of 59.3 and retreating from the record high of 61.6 achieved September, indicating that the economy continues expanding at a robust pace.
The final Markit Services PMI for the Union will be out this Tuesday, alongside the EU's September PPI. In the US, attention will roll around the mid-term elections. According to the latest polls, Democrats have good chances of stealing Republicans the control of the Congress, and if such happens, the USD could suffer a major set-back and so do US equities, which record gains from these last two years have been the result of tax cuts and deregulation from Trump's administration. For sure, elections will rock the boat ahead of the Fed's monetary policy meeting next Thursday.
The EUR/USD pair remains at the lower end of Friday's range, and the 23.6% retracement of its September/October decline at 1.1425, which limits the case of a steeper recovery at least until the result of US elections is out. In the 4 hours chart, the pair is trading a handful of pips above its 20 SMA, but still below firmly bearish 100 and 200 SMA, while technical indicators offer diverging directional slopes right above their midlines, reflecting the back and forth in price amid the ongoing uncertainty, rather than suggesting an upcoming direction.
Support levels: 1.1360 1.1330 1.1300
Resistance levels: 1.1425 1.1455 1.1490
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