While the economic docket is very thin today, the main driver in the FX markets today will be the reaction to the US Midterm Election. As pointed out in our article “How will the US midterm elections affect the financial markets?”, it is now becoming clear that the Democrats could gain back control of the House of Representatives. They have now a better chance to block or at least delay decisions from the Trump administration.
Source: Economic Events 06/07 November 2018 – Admiral Markets’ Forex Calendar
Bearing in mind that Trump’s protectionist “America first” policy is likely to push the US-Dollar higher, one would expect the Greenback to lose on such an outcome against the Euro, with the EUR/USD currency pair stabilizing well above 1.1400 USD. From a technical perspective we should nevertheless think back to the Weekly Market outlook on Monday, where we pointed out the fact that the EUR/USD currency pair technically remains bearish below 1.1600/1630 on a daily basis.
So it could well likely be that after the initial drop in the US Dollar and after the US midterm election dust settles, markets show once again that political legs are short, EUR/USD fails to make it above 1.1430/1450 and goes for another attempt to break below 1.1300:
Source: Admiral Markets MT4 with MT4SE Add-on – Accessed: 07 November 2018, 08:00 AM CET
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