The EURUSD pair locked in gains on Thursday, November 5, with the single currency climbing 0.85%, to 1.1821 against the US dollar. The battle for the US presidency continues to rage on. At the moment, of the 270 electoral college votes needed to win, Trump has 214, while Biden holds 264. There are also some states where the results are too close to call: Pennsylvania (20 electoral votes), North Carolina (15 electoral votes), Nevada (6 electoral votes) and Georgia (16 electoral votes).
Democrat hopeful Joe Biden believes he won the 2020 election, while Donald Trump claimed “legal” victory. He is demanding a recount in some states, pledging to launch litigation in the Supreme Court, since the postal voting system has led to corruption. His legal team is currently working on this case.
It still remains unclear how long it will take for the election result to be called. In Nevada, all mail ballots must be counted on or before November 12, while the outcome in Georgia should be called in 10 days. Investors are pricing in the scenario that Joe Biden is poised to become the next US president, while the Republicans will retain control over the Senate.
Today’s macro agenda (GMT+3)
11:30 UK: Halifax house price index (October)
16:30 US: unemployment rate and non-farm payrolls (October); Canada: unemployment rate and employment change (October)
18:00 Canada: Ivey PMI (October)
23:00 US: consumer credit change (September)
After retracing to an earlier high, EURUSD has been trading sideways for over 17 hours. Investors look forward to the Democrats quickly passing a stimulus package under Biden’s leadership.
The market showed a sluggish reaction to yesterday’s FOMC meeting and speech by US Federal Reserve Chairman Jerome Powell. Powell stated that the pace of economic recovery has slowed down. Moving forward, the path towards recovery is fraught with uncertainty. The regulator expects to keep monetary policy soft until its employment and inflation targets are met.
At the time of writing, the euro was going for 1.1833. For the past 17 hours, the price action has been hovering near the upper bound of a triangle formation. Buyers have been holding their defense above 1.1795, while targeting 1.1875. The FX market environment still looks uncertain due to ongoing ballot counting and protests. Major currencies are showing mixed dynamics, which implies that we should expect multidirectional fluctuations ahead of the North American session. We believe that, all other things being equal, there should be an adjustment to the balance line in the vicinity of 1.1760. One triangle pattern has already morphed into an upward move, and according to the rule of alternation, a corrective pattern could form upward from 1.1603 to 1.1860. Notably, today is Friday, so players are advised to close out long positions ahead of the weekend.
Incidentally, market participants have been so pumped up over the election saga that they have been brushing aside coronavirus negativity. Over the past 24 hours, 21,506 new confirmed coronavirus cases were registered in Germany, while globally there was a record upsurge in daily infections: 535,928 new Covid-19 cases.