• EUR/USD has hit a one-week high amid hopes for a decisive victory for Biden in the US elections.
  • A "sell the fact" response" to an announcement and worrying covid statistics could change the picture.
  • Thursday's four-hour chart is painting a bullish picture.

How close is Democrat Joe Biden to becoming the 46th President of the United States? Markets seem to be pricing that in. The former Vice-President is leading against President Donald Trump in the electoral college – 253 to 214 according to the latest tallies and networks could project Biden as the winner at some point on Thursday. 

Trump is urging friendly Fox News and other networks to retract their decision to call Arizona for Biden. The president is trailing in the Grand Canyon State as well as in neighboring Nevada but hopes for a late victory in the final count.

On the other hand, the Republican incumbent wants counting to be stopped in Pennsylvania and Georgia, where he is in the lead, but slow-counting of in cities and of mail-in ballots is et to skew heavily toward Democrats. 

Arizona, Nevada, and Georgia may declare winners on Thursday – perhaps late in the date. Winning any two would elevate Biden's electoral college count to 270 or more – securing the White House. If not, it goes down to Pennsylvania. 

What about the stimulus? Republican Senator Susan Collins won reelection in Maine, all but sealing Democratic hopes of flipping the upper chamber. This implies that the GOP could block a generous stimulus package and that should have dampened the mood.

However, Senate Majority Leader Mitch McConnel said on Wednesday that he would be ready to talk about aid to states – a key Democratic demand that the GOP seems reluctant to give ground on. Moreover, some analysts note that Biden and McConnell are on good terms. 

All in all, hopes for stimulus are high while a split government implies low chances of tax hikes and regulation that markets dislike. The surge in stocks is weighing on the safe-haven dollar and boosting EUR/USD

2020 Elections: Markets cheer prospects of a delayed Biden victory, not a contested election

Are markets in a "buy the rumor, sell the fact" mode? The well-known phenomenon could result in profit-taking if Biden is announced the inner. 

Apart from waiting for the results, markets will be paying attention to the Federal Reserve's decision later in the day. The Fed is set to leave its policy unchanged after pledging to leave interest rates low at least through 2022. 

See Fed Preview: Powell set to convey cautiously optimistic message, unless he has depressing NFP data

Ahead of the Fed, weekly US jobless claims are projected to extend their gradual decline. On Wednesday, ADP's private-sector labor data showed an increase of 365,000 positions, fewer than expected. The ISM Services PMI pointed to ongoing growth, but the employment component fell, implying weaker hiring trends. 

The figures come ahead of Friday's Nonfarm Payrolls statistics for October. The ongoing elections are overshadowing the Fed and the NFP in a historic week. 

In Europe, coronavirus cases continue rising, with Germany surpassing the 20,000 marks. No new lockdowns are discussed for now, but the lack of improvement could result in new tough decisions for governments across the continent. COVID-19 has been off the radar in recent days and could return with a vengeance once the dust settles from the elections. 

All in all, there is room for more upside before a potential change of mood. 

EUR/USD Technical Analysis

Euro/dollar enjoys upside momentum on the four-hour chart and the Relative Strength Index is still under 70 – thus outside the overbought territory. On its way up, the currency pair surged above the 50, 100, and 200 Simple Moving Averages. 

The next level to watch is 1.1840, which capped a recovery attempt last week. IT is followed by 1.1865 and 1.1880. 

Some support awaits at 1.1790, which was a support line last week. It is followed by 1.1170, a high point earlier this week. The next levels to watch are 1.1720 and 1.17.

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