EUR/USD Forecast: Calm before the Super Tuesday storm

The EUR/USD is trading in a narrow range in the wake of the week, quite different from the action it experienced last week. The Euro enjoyed the comeback of global stocks and the consequent downfall of the US Dollar on the risk-on sentiment. It created a double-bottom at 1.1300 and hit a high of 1.1455 before sliding back to the range.

The recent slide came as White House officials played down expectations for a trade deal between the US and China. Reports about Trump instructing his cabinet to prepare a trade deal seemed premature or perhaps a ploy ahead of the Mid-Term Elections.

The fresh slide in Asian stocks is dampening the mood and limiting any gains for the EUR/USD.

Americans go to the polls on Tuesday to elect all the House, the lower chamber, and 36 out of 100 Senators. Recent opinion polls give the Democrats a high chance of winning the House while Republicans are set to retain the Senate. 

A split government may limit Trump's ability to enact tax cuts, trade deals, and de-regulation and could weigh on the US Dollar. A surprise Republican win could send the greenback higher. 

See: What the US mid-term elections mean for currencies: everything you need to know

In Europe, there is no progress on the clash between Italy and the European Commission. The EC rejected the budget of the third-largest economy in the currency bloc. Italy is set to send its response by November 13th. The absence of new developments provides temporary calm. 

Reports about a significant advance in Brexit talks have pushed the Pound higher but have failed to lift the Euro at this juncture. Expectations are rising toward the cabinet meeting on Tuesday. Some British outlets suggest that PM Theresa May will present a deal. In an unusual move, ministers were not given the agenda of the meeting. In the past, the Euro was carried away with the Pound. 

A combination of considerable news on Brexit and the US Mid-Terms could prove explosive for the EUR/USD. The current limited range may be the calm before the storm.

EUR/USD Technical Analysis

The EUR/USD is trading just above the 50 Simple Moving Average on the four-hour chart, a bullish sign. Momentum remains to the upside. However, the limited moves leave room for doubts about an upside move. The Relative Strength Index (RSI) remains flat at around 50.

Resistance awaits at 1.1400, a round number that capped the pair so far in the new week. 1.1430 was a swing high in late October and support afterward. 1.1455 was the peak on Friday. It is followed by 1.1495 that capped the pair earlier in October.

Looking down, 1.1375 provided support on Friday. It is closely followed by 1.1360 that was a swing high late in October and a support line beforehand. 1.1330 was another swing low in late October and the 1.1300 is a significant support line - a double bottom.