Nov 08, 2022
VOT Research Desk
After reaching its highest point in ten days on Monday at 1.0035, the EURUSD lost its positive momentum early on Tuesday and fell below parity.
On the day of the United States’ (US) midterm elections, investors are still being cautious, which keeps the US Dollar (USD) strong compared to its rivals.
By gaining five additional seats, Republicans are predicted to take control of the majority in the US House of Representatives. However, the campaign for the US Senate is anticipated to be more competitive.
A risk bounce might be seen in the US stock markets if Republicans win control of the US Congress because they would prevent Democrats from enacting expansionary fiscal policies that could drive inflation further higher.
The US Dollar (USD) should do well in that situation. On the other side, a divided government with Democrats maintaining their majority in the US Senate may compel investors to seek safety since that would make the fiscal policy even more unpredictable.
Although it is difficult to predict how the results of the US midterm elections will affect the US Federal Reserve’s policy outlook, Wall Street’s response may provide some insight into the future course of the US Dollar (USD).
EUR/USD Technical Analysis Report:
The officials of the European Central Bank (ECB) have been making hawkish remarks on the prospects for the Eurozone’s monetary policy, and the Euro (EUR) may retain its ground if investors are confident that the ECB will maintain its aggressive tightening posture.
The EURUSD pair’s near-term technical picture indicates that it is still positive despite the most recent dip. On the chart, the Relative Strength Index (RSI) indicator easily oscillates over 50, and the 20-period Simple Moving Average (SMA) has above the 100-period SMA.
If EURUSD is able to stabilise above the psychological level of 1.0000 (a static level), 1.0035 (also a static level) will act as the next resistance level before 1.0100. (psychological level, static level).On the downside, the static level of 0.9965 serves as the initial support level, followed by 0.9900 (a psychological level, a 50-period SMA, and a 100-period SMA), and 0.9870. (static level).
