Good day forex traders.
It is midweek and let’s do a pulse check on the EUR/USD.
We mentioned previously that this week brings the US mid term elections and US Federal Reserve interest rate event.
Looking at the EUR/USD daily chart above we noted that the currency pair is now back above 1.14. Having said so, the middle bollinger band is currently functioning as a resistance region. We will need to monitor closely on a shorter time frame so that we are better prepared to leverage on any development.
A number of analysts believe that the US mid term elections resulted in a deadlock. As investors usually avoid uncertainty, the hypothesis is such that we may see a weaker demand for the US dollar.
The US Federal Reserve is due to release the interest rate decision today. Most investors are of the belief that the interest rate will remain unchanged for November and increase in December.
As the market loves a high interest rate for the currency, the US dollar may see an increase in demand in weeks to come. Having said so, if the apparent deadlock arising out of the US mid term elections turn out to be more complicated than expected, negative sentiments towards the US dollar may overwhelm the interest rate advantage.