Current trend

This week, the EUR/USD pair tested 1.0925 (Murrey level [3/8]) and today, fell to 1.0702 amid the US presidential race results. The official results have not yet been announced but the probability of Republican candidate Donald Trump coming to power prevails. In addition, his supporters may gain a majority in the Senate, allowing them to fully control Congress and implement new economic plans that may have negative consequences for the country’s trading partners. Thus, previously, Trump promised that he would introduce increased import tariffs, which for allies could amount to 10.0–20.0%, causing retaliatory measures from the EU authorities and putting pressure on the EU economy. In addition, the official’s election program includes a significant easing of taxes for businesses and citizens, which may result in a resumption of inflation growth and the US Fed’s refusal to ease monetary policy. Meanwhile, tomorrow the regulator will adjust the interest rate by –25 basis points, and it is possible that in December, it will keep the indicator the same, and next year, it will move to raising the borrowing cost.

The EU PMI data published today was positive. The service PMI increased from 51.4 points to 51.6 points instead of the expected decrease to 51.2 points, and the composite PMI increased from 49.6 points to 50.0 points, entering the green zone. In general, the state of business is improving but cannot support the euro yet since negative investor sentiment associated with the US elections is likely to continue to dominate in the medium term.

Support and resistance

The trading instrument is testing 1.0742 (Murrey level [0/8]), consolidation below which will allow it to reach the area of ​​1.0645 (Fibonacci correction 38.2%) and 1.0600 (the area of ​​April lows). With a repeated upward breakout of the middle line of Bollinger bands 1.0864 (Murrey level [2/8]), growth may resume to the area of ​​1.0986 (Murrey level [4/8]) and 1.1047 (Murrey level [5/8]).

Technical indicators confirm further decline: Bollinger bands and Stochastic are reversing downwards, and the MACD histogram is increasing in the negative zone.

Resistance levels: 1.0864, ​​1.0986, 1.1047.

Support levels: 1.0742, 1.0645, 1.0600.

Trading tips

Short positions may be opened below 1.0742, with the targets at 1.0645, 1.0600, and stop loss 1.0810. Implementation period: 5–7 days.

Long positions may be opened above 1.0864, with the targets at 1.0986, 1.1047, and stop loss 1.0800.