EUR/USD Forecast: NFP may trigger the next jump as final US election results are eyed

• EUR/USD has been holding onto its gains as markets are following the US elections.
• The Nonfarm Payrolls and the dovish Fed decision are in play and may continue weakening the dollar. 
• Friday's four-hour chart is painting a bullish picture. 

Rally, consolidation, and a fresh rally? That seems to be the pattern for EUR/USD, which has shied away from the overbought territory on the four-hour chart and may now be ready to resume its rise. Fundamentals continue looking bullish.

The count in the US elections continues with Democratic nominee Joe Biden in pole position to win the presidency. The former-Vice President has taken the lead in Georgia, which is set to go down to the wire. Biden also leads in Nevada and Arizona, with the latter somewhat moving toward President Donald Trump. The incumbent is ahead in Pennsylvania but that is narrowing.

For a full picture, see 2020 Elections: Where the race stands in four critical states, traders on the edge of their seats

Trump has repeated his unsubstantiated claims of fraud, saying that he would win if the legal votes are counted and the illegal ones are thrown out. On Thursday, he tweeted Stop the count." Freezing the results would bring Biden to 270 electoral college votes, handing him the presidency – even before the Democrat took the lead in Georgia.

At the moment, markets are betting that a clear outcome is only a matter of time, but that there would be a peaceful transfer of power. The safe-haven dollar may extend its falls if the picture becomes clearer for Biden, and it could gain if the elections become contested. 

Apart from the elections, the greenback is on the back foot due to the relatively dovish decision by the Federal Reserve. The world's most powerful central bank said that the pace of the recovery has moderated and added that it discussed its bond-buying scheme. Jerome Powell, Chairman of the Federal Reserve, expressed concern about the resurgence of coronavirus in the US and abroad. He also urged lawmakers to act. 

See Fed Analysis: Powell adds fuel to the market fire by defending QE, rally set to extend

COVID-19 cases continue rising on both sides of the pond and could weigh on EUR/USD later on, once the dust from the US elections settles. 

The elections are overshadowing the Federal Reserve and also the Nonfarm Payrolls, yet the monthly jobs report remains of high importance. Expectations stand at an increase of around 600,000 positions, an enormous gain in pre-pandemic times, but moderation in comparison to the job restoration in previous months. 

See Nonfarm Payrolls Preview: Encouraging data but little action expected

Markets are in a cheerful mood. A miss in the NFP could be seen as increasing the chance of more QE from the Fed. That could boost stocks and further push the dollar lower.

Overall, EUR/USD may extend its gains due to the elections, the Fed, and the NFP.

EUR/USD Technical Analysis

Euro/dollar continues benefiting from upside momentum on the four-hour chart and the Relative Strength Index is still below 70 – outside overbought conditions. The pair trades above the 50, 100, and 200 Simple Moving Averages. All in all, bulls are in control – as long as the RSI does not leap.

Resistance awaits at 1.1860, Thursday's high, followed by 1.1880, October's peak, and then by 1.19 and 1.1920.

Some support awaits at 1.1840, a peak in late October, followed by 1.1790, a stepping stone on the way up, and then by 1.1760 and 1.1720.