Euro fight for parity is ongoing as U.S. midterm elections could have a long-term impact on the dollar
The results of the US midterm elections could have a long-term impact on the dollar.
For mode determining swings, market players wait for new inflation-related information.
Despite being in a narrow correction phase, the EUR/USD currency pair is still looks positive.
The continued demand for the dollar prevented the EURUSD pair from holding onto the 1.0000 level, and it retraced from a two-week peak of 1.0034 during European trading hours. As the US stock market opens, the pair is trading close below the level as major stock markets attempt to register improvements. Investors’ hesitation as they awaiting the outcome of the US midterm elections and the Consumer Price Index update, due on Thursday, contributed to the negative mood.
In particular, if Democrats are unable to maintain control of both chambers, the conclusion of the US midterm elections may have long-lasting consequences on the US dollar. Republicans need a majority in Congress to take control. If so, they might resist President Joe Biden’s extravagant spending, which would raise the likelihood of an economic recession. It is unlikely that the dollar will gain much from the probable collapse of the stock market.
Despite favorable local data, the euro declined. While the annual reading of retail sales in the European Union came in at -0.6%, better than the -1.3% anticipated, the monthly number was up by 0.4% MoM. The NFI Business Confidence Index was released by the US and fell from 92.1 in September to 91.3 in October.
Short-term technical forecast for EUR/USD
The EURUSD pair’s daily chart reveals that it encountered sellers at the 100 SMA, which oscillates about 1.0050 and is just slightly bearish. The 20 SMA continues to rise above the existing level at the same time.
The RSI indicator consolidates near 56 while the Momentum indicator maintains its positive slope far above its midline. Consequently, the risk is still tilted to the upside, but in order to have a clearer bullish path, the pair needs to break over the indicated 100 SMA, which has been acting as resistance from June 2021.
The 4-hour chart indicates that the pair is likely to correct downwards in the near term, but it still has a positive bias. The 20 SMA is rising above the longer ones as the pair develops above all of its moving averages. Chart patterns, however, are accumulating downward strength well above their midlines and are dropping from overbought position. Without truly hurting the positive prospects, the corrective slide could continue towards to the 0.9880 price region.
Support levels: 0.9970 0.9920 0.9880
Resistance levels: 1.0050 1.0090 1.0135
