EUR/USD Price Forecast – EUR/USD Trades Flat As Momentum from Weaker USD Fizzled Out over Weekend
The EUR/USD currency pair was solidly bid on Friday and looked set to take out the upper hand rising on momentum influenced by broad based weaker US greenback despite lack of fundamental support but a better-than-expected non-farm payrolls number and the confusion surrounding the US-China trade deal put a bid under the greenback as trading session opened for the week. An overwhelming majority of opinion polls suggest that the Democrats are likely to win back the House, but the Republicans will likely keep the Senate, leading to a divided Congress. Major market moves are ruled out if the midterm elections do produce a split Congress as expected. As of writing this article, the EUR/USD pair is trading flat at 1.1390 up by 0.01% on the day.
Pair Likely To Trade Flat As Investors Observe US Election Proceedings
The EUR/USD pair had good two-way moves on Friday and finally ended the week on a downbeat note. When looking at the price action in daily chart, the pair seems to be trapped in a falling wedge pattern. A Republican victory in both houses, however, could mean more fiscal stimulus, in which case a falling wedge breakout may remain a distant dream. On the other hand, a Democrat victory in both chambers may hurt the USD and could yield a falling wedge breakout in the EUR/USD (a bear-to-bull trend change). This is because Democrats want to raise the corporate tax rate to fund social programs. The caution ahead of the midterm elections will likely keep the EUR/USD flat lined today.
The shared currency was further weighed down by reports that the European Central Bank (ECB) was considering a second round of a long-term refinancing operation – LTRO – to support European banks at its December meeting. This comes amid concerns over drama surrounding Italy’s 2019 budget proposal and worries about the health of country’s banks against the backdrop of their large sovereign debt holdings. Today’s Euro-zone economic docket lacks any major market-moving economic release and hence, the USD price dynamics might continue to act as an exclusive driver of the pair’s momentum ahead of the release of the US ISM non-manufacturing PMI, later during the US trading session. Expected support and resistance for the pair are at 1.1360, 1.1330, 1.1300 and 1.1420, 1.1455, 1.1490 respectively.