The EUR/USD price has been in a strong recovery mode in the past two days. It rallied to a high of 1.0038, which was the highest level since October 27. The EUR to USD exchange rate has jumped by about 5% from the lowest level this year.
US midterm elections and inflation data
The EURUSD price has done well recently as investors wait for the upcoming US midterm elections that will determine the composition of Congress. Most polls believe there will be a change in the balance of power in the US, with Republicans taking the House and the Senate. A win by the Republicans will mean that Biden’s agenda will be curtailed for the next two years.
The pair has also recovered following last week’s Fed decision and nonfarm payrolls (NFP). In its decision, the Fed hiked interest rates by 0.75% for the fourth time straight. This increase brought interest rates to 4%. The bank also committed to continuing with its quantitative tightening (QT) policy and to be data-dependent when making its decision.
One of the numbers that the Fed is watching is the NFP data. According to the Bureau of Labor Statistics (BLS), the American economy added more than 230k jobs in October while the unemployment rate rose to 3.7%. The next key data to watch will be the latest inflation numbers scheduled for Thursday. Economists expect the data to show that inflation remained at an elevated level in October. As such, this will mean that the Fed will hike rates by 0.50% in December.
EUR/USD forecast
The four-hour chart shows that the EUR to USD exchange rate continued its recovery in the overnight session. It rose to a high of 1.0031, which was slightly below the first resistance of the standard pivot point. The pair also managed to move above the key resistance at 1.00025, which was the highest level on October 4.
The EUR/USD price moved above all moving averages. Therefore, it will likely continue rising as buyers target the next key resistance level at 1.0095, the highest point on October 27. A drop below the support at 0.9980 will invalidate the bullish view. The bullish view is in line with my recent EURUSD forecast for November.
