The EUR/USD pair is consistent as traders react to the recent odds of a Joe Biden victory.
Traders believe that a Biden victory will be a positive thing for the euro.
It is also reacting to mixed economic data from the U.S. and Europe.
The EUR/USD pair is relatively volatile as traders react to the results of the U.S. election and mixed economic data from Europe. It is traded at 1.1696, which is between the daily low of 1.1600 and the high of 1.1770.
US results point to a Biden victory
The market is reacting to the increasing chances that Joe Biden will win the election. According to the Wall Street Journal, the former vice president won 238 votes compared to 213 for Trump. Most importantly, he is the leader in Michigan, Wisconsin and Nevada, which means he has a higher probability of winning. Similarly, players have also begun to price in a Biden win, as shown below.
Biden odds are increasing
In general, analysts believe that a Biden victory will lead to a relatively stronger Euro for several reasons. Firstly, it will eliminate the likelihood of a trade war between the European Union and the United States on a “what you take” basis. Second, it will lead to a probable stimulus trade in the United States, eliminating the risk factor that tends to favor the dollar. Finally, investors in his administration expect more government spending, which will lead to more deficits.
Mixed Economic Data
The EUR/USD is also reacting to mixed economic data from the United States and Europe. Earlier today, data released by Markit showed that the Euro-Zone Services PMI fell to 46.9 in October as the region continues to fight the pandemic. This was the fourth consecutive month that the PMI was below 50.
The report attributed the decline to the continued decline in new business received both domestically and abroad. Employment in the sector was cut by half, while the cost of inputs continued to rise. At the same time, business confidence dropped to a five-month low as the number of Covid 19 cases continued to rise. In the statement Markit said:
“Optimism for the future also plummeted, slipping to its darkest level since May as companies became increasingly concerned about the damaging effects of the second wave of infection.
Elsewhere, in the United States, the service’s PMI rose to 56.9, exceeding consensus estimates of 56.0, and the composite PMI also rose to 56.3, demonstrating that the U.S. economy is still doing well.
Technical Outlook EUR/USD
Technical Table EUR/USD
The EUR/USD pair is trading at the 1.1693 level. On the daily chart we can see that the price is at the same level as the 25-day and 15-day exponential moving averages. It is also above the important support at 1.1612 where the pair has formed a double bottom pattern. Therefore, the pair is likely to continue to rise as the bulls attempt to move above the 1.1700 resistance level. Start trading with our free forex trading course.