The EUR to USD (EURUSD) pair is holding steady as the market continues to price-in a gridlock in the United States. They are also waiting for the Fed interest rate decision that will come out later today.
While tallying is still going on in some US states, analysts have already started pricing-in a Joe Biden presidency. This is because he has already won some key states, including Michigan and Wisconsin. And, in Pennsylvania, the gap between him and the president has narrowed, which means that he could still flip the state.
If he wins, it will lead to gridlock in Washington since Republicans will continue controlling the senate. The implication is that most of his most ambitious programs, including spending on climate change will not pass through the senate.
The EURUSD is also rising as traders refocus on the Federal Reserve and the upcoming jobs numbers. The Fed, which started its monetary policy meeting yesterday, will deliver the final decision later today. Economists polled by Bloomberg expect that the bank will leave interest rates at the current range of 0.0% and 0.25%.
Furthermore, the bank has already sent signals that rates will remain low even after inflation reaches 2%. Also, they expect the bank to commit to more quantitative easing as the US economy continues to slow.
The EUR to USD is also waiting for the nonfarm payroll numbers that will come out tomorrow. Analysts expect the data to show that the unemployment rate dropped to 7.7% while the economy added about 600k jobs.
EURUSD technical outlook
On the hourly chart, we see that the EURUSD pair has risen by more than 1.15% from yesterday’s low of 1.1600. The price is also along the upper line of the Donchian channel, which is a sign that bulls are prevailing. It is also along the 50% Fibonacci retracement level. This retracement connects the highest level in October and the lowest level this month.
Therefore, for today, we expect that the pair will be relatively volatile. As such, the key level to watch is the 61.8% retracement at 1.1780 and the 38.2% retracement at 1.1700.
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EUR to USD technical chart
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