EUR/USD Mid-Session Technical Analysis for November 7, 2018

The Euro is trading higher against the U.S. Dollar on Wednesday in reaction to the Democrats taking control of the U.S. House of Representatives following Tuesday’s mid-term elections. With the Republicans retaining control of the Senate, a split U.S. Congress has been created, raising expectations that any major fiscal boost to the economy is unlikely for perhaps the next two years, or the rest of President Trump’s term.

At 1207 GMT, the EUR/USD is trading 1.1485, up 0.0061 or +0.53%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has shifted to the upside. The main trend will change to up on a move through 1.1555. A move through 1.1301 will signal a resumption of the downtrend.

The minor trend is up. It turned up earlier today when buyers took out 1.1458. This move also shifted momentum to the upside. The new minor bottom is 1.1355.

The key upside target is a major retracement zone at 1.1498 to 1.1559.

The main range is 1.1622 to 1.1302. Its retracement zone is 1.1428 to 1.1458. The EUR/USD is currently trading over this zone, giving it an early upside bias. The zone is also support.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the main Fibonacci level at 1.1498.

A sustained move under 1.1498 will indicate the return of sellers. If the selling pressure increases then look for a possible pullback into the short-term Fibonacci level at 1.1458, followed by the short-term 50% level at 1.1428.

The trigger point for an acceleration to the upside is 1.1498. The daily chart indicates there is plenty of room to the upside over this level with the next targets 1.1555 to 1.1559.

We’re probably looking at a knee-jerk reaction to the election so try not to read into today’s rally too much. After the dust clears, the Euro is still going to have to face the fallout from the simmering situation between the European Union and the Italian government. Furthermore, there is still the divergence between the hawkish U.S. Federal Reserve and the dovish European Central Bank.