EUR/USD was on the rise today, earlier on during the day, yet with the votes being counted in the US election, it appears that the pair is reversing direction. In particular the pair has just broken below our support turned to resistance level at the 1.0880 (R1) line. We opt for a bearish outlook for the pair and supporting our case is the RSI indicator below our chart which has sharply dropped below the figure of 50, implying a bearish market sentiment may be emerging. Moreover, we would like to note that an upwards gap was formed just above our S1 support level. For our bearish outlook to continue we would require a clear break below the upwards moving trendline which was incepted on the 29th of October in addition to a clear break below the 1.0835 (S1) support level, if not also the 1.0770 (S2) support line with the next possible target for the bears being the 1.0700 (S3) support base. On the flip side for a bullish outlook we would require a clear break above the 1.0880 (R1) resistance line if not also the 1.0930 (R2) resistance level with the next possible target for the bulls being the 1.0993 (R3) resistance ceiling. On a political level, the US elections are in full swing with votes now being counted. At the time of this report former President Trump is leading by 23 electoral college votes to Vice President Harris’s 3. We must note that the current states that have been called, where “expected” to be “red” and “blue” and our attention turns to the swing states. In our view we would not be surprised to see a photo finish for the Presidency that may be decided by the state of Pennsylvania. Overall, should swing states be called for Trump, we may see the dollar strengthening whereas should they be called for Harris we may see the dollar weakening. In conclusion, volatility appears to be high and with election night just having started we would not be surprised to see increased volatility heading into Wednesday’s European trading session.
EUR/USD H4 chart
Support: 1.0835 (S1), 1.0770(S2), 1.0700 (S3)
Resistance: 1.0880 (R1), 1.0930 (R2), 1.0993 (R3)
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