EUR/USD Forecast: Technicals and fundamentals look bullish as Americans go to the polls

The EUR/USD is trading in a narrow range around 1.1400 as Americans go to the polls.
Recent developments provide reasons to be cheerful for the bulls.
The technicals also lean slightly higher on the four-hour charts.

Yohay Elam FXStreet

The EUR/USD is trading around 1.1400 in the European session, entrenched in a limited range. Americans go to the polls today to vote a new House of Representatives and elect 36 out of 100 members of the Senate.

Recent opinion polls and forecasts continue to show Democrats as favorites to win the House and Republicans to retain the Senate. There is a marginal uptick in Democrats' chances.

A divided government may limit Trump's policies on taxes, trade, and deregulation and may weigh on the US Dollar. However, it will not be a wild surprise at this point. A surprise Republican win in the lower chamber can send the US Dollar.

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

Apart from a potential Democrat win in the House that could weigh on the greenback, the EUR/USD has reasons to rise from the European side.

Italy and the European Commission are negotiating Italy's budget for 2019 after the EC had rejected it. Italy's Economy Minister Giovanni Tria came out of the Eurogroup meetings with some optimism. The euro zone's third-largest economy will submit its response by November 13th. The optimism is USD-positive.

In the UK, Prime Minister Theresa May will convene her cabinet as Brexit talks seem to reach crunch time. The Irish border remains the most critical sticking point. Reports about an imminent deal have been denied by various officials and so have rumors about the potential resignation of Brexit Secretary Dominic Raab.

Positive Brexit headlines may push the Euro higher, as we have seen in the recent past.

German factory orders beat with 0.3% in September. Markit's Services PMI's are also eyed.

EUR/USD Technical Analysis

The pair is getting comfortable above the 50 Simple Moving Average on the four-hour chart, a bullish sign. Momentum is positive as well. The Relative Strength Index (RSI) is above 50, but below 70, not reflecting overbought conditions.

Resistance awaits at 1.1455, the peak seen late last week. 1.1495 capped the pair in late October. 1.1550 and 1.1620 also served as high points in October.

Looking down, 1.1355 was a low point on Monday. Further down, 1.1330 was a low point in late October. 1.1300 is super strong support line: a double bottom that prevented further falls last week.

More: EUR/USD path of least resistance is up as Americans go to the polls – Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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