EUR/USD Price Forecast: US Dollar soars on Trump's victory
The EUR/USD pair plummeted below the 1.0700 level during European trading hours on Wednesday, down roughly 250 pips from its Asian peak, as the US Dollar soared on the back of Donald Trump’s victory in the United States (US) presidential election. So far, Trump has secured 277 electoral votes, surpassing the 270 required to win the presidency.
The Republican candidate won Georgia, North Carolina and Pennsylvania, key swing states, and delivered a speech at the Palm Beach Convention Center, declaring victory before securing the required electoral votes.
Ahead of Wall Street’s opening, the pair pressures the intraday low as solid demand for the USD continues. In the meantime, stocks soared with US indexes poised to open with substantial gains, welcoming Trump’s victory.
Macroeconomic data is being ignored by market players, as encouraging Eurozone figures pass unnoticed. The Hamburg Commercial Bank (HCOB) released the final versions of the October Services and Composite Purchasing Managers Indexes (PMIs), which were upwardly revised. The EU services index was confirmed at 51.6, while the Composite PMI hit 50, following a 49.7 reading. The Eurozone also reported that the Producer Price Index (PPI) declined 0.6% on a monthly basis in September, down from a year earlier by 3.4%.
The US will not publish relevant data but the Federal Reserve (Fed) is undergoing a monetary policy meeting and will announce its decision on Thursday. Financial markets have priced in a 25 basis points (bps) interest rate cut, but given the US election result, the focus will likely be on Chairman Jerome Powell’s speech and any adjustment to his tone given the new political scenario and its potential implications.
EUR/USD short-term technical outlookThe EUR/USD pair trades at levels last seen in June, and despite the sharp slide, there are no technical signs it may change course anytime soon. In the daily chart, the pair plummeted below all its moving averages after meeting sellers around a flat 100 Simple Moving Average (SMA) for a second consecutive day. At the same time, the 20 SMA heads firmly lower below the longer ones, in line with the strong downward momentum. Finally, technical indicators changed course and head south almost vertically within negative levels, reflecting sellers’ strength.
The near-term picture supports additional losses. In the 4-hour chart, technical indicators maintain their firmly bearish slopes despite standing in oversold territory. Even further, the 20 SMA turned lower while the longer ones also gained downward traction. The June monthly low at 1.0667 is the immediate support level en route to the 2024 low at 1.0600.
Support levels: 1.0665 1.0630 1.0600
Resistance levels: 1.0715 1.0760 1.0800
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