The Euro trades higher as the greenback loses ground following the election of a divided US Congress. The outcome of last night’s US midterm elections came as expected with the Republican party retaining control of the Senate, but losing control of the House of Representatives to its rival party, the Democrats. The US Dollar lost ground as a divided Congress will mean that it will become more difficult for President Trump to pursue his desired fiscal initiatives which leads to the moderation of inflationary pressure. Simply speaking, expectations of lower inflation means expectations of lower interest rates leading to lower demand for US treasury and thus lower demand for the US Dollar. For today, the focus will remain on how investors digest last night’s results. Additionally, they will monitor the EU Retail Sales figure as it may affect the pair from the Euro’s side.
The Euro breaks above the three day range following the US midterm elections. The drop in the US dollar helped the Single currency break the 1.1456 resistance level paving the way for a rise towards the next significant resistance level at 1.1513. The pair is also supported by a bullish momentum signal in which the 13-period moving average crossed above the 50-period moving average.
Support: 1.1322 / 1.1285
Resistance: 1.1456 / 1.1513