- Summary:
- Many factors are at play around the EURUSD ecosystem, but most of them seem to favour the euro in the intervening period to US elections.
EURUSD extended its gains on Thursday, going at 1.0872, having gained 0.1 percent at the time of writing. The US jobs market showed signs of stability with Initial Jobless Claims data for the week ending October 24 coming in at 1,862k, below the forecast estimate 1,890. However, dollar got weighed down by jitters surrounding next week’s presidential elections and a strong show by Eurozone economies.
The EURUSD currency pair has been on an upward momentum for the last three sessions, keeping it on course to register the first weekly gain after four successive weekly losses. Q3 Eurozone GDP figures released on Wednesday showed that the Eurozone economy grew at 0.4 percent, faster than the median forecast rate of 0.2 percent. The euro also got support from Eurozone inflation, which rose higher than expected to 2 percent in October, exceeding the forecast figure of 1.9 percent.
However, the US dollar’s downside will be limited after the September Core Personal Consumption Expenditure (PCE) Index readings came at 2.7 percent YoY, beating median forecast estimate of 2.6 percent. The PCE is the Federal Reserve’s prefered inflation gauge, and the reading aligns with the wider market sentiment that the Fed is unlikely to go for a deeper interest rate cut in November.
Meanwhile, the US presidential election is also in play. The two presidential candidates are tied neck and neck as per opinion polls, but the prospect of a win by Donald Trump offers greater support to the dollar. Trump’s policies stands on trade tarriffs and corporate taxes are seen as likely to be inflationary, and could prop up interest rates.
EURUSD chart
On the chart below, EURUSD is likely to keep rising if the momentum keeps it above the pivot mark at 1.0881. That will support further gains, which could encounter the first resistance at 1.0873. However, a stronger bullish push could break above that level and test 1.0881.
Conversely, a move below 1.0859 will favour the sellers to take control. The first support is likely to come at 1.0851, but a stronger downside momentum could break below that level and test 1.0844.
