The Euro holds positive tone and probes above upper boundary of overnight’s 1.1472/1.1394 range at the beginning of European session on Wednesday, following bumpy ride in Asia on announcement of results of US midterm election.
The single currency could benefit from election split which causes increased uncertainty in the market and could push traders to reduce dollar longs. The US Democratic party won the control of the House of Representatives while Republicans remain majority in the Senate, with split Congress likely to delay or block President Trump’s agenda (boosting corporate growth and tax cut for the middle class) that could have negative impact on the greenback.
The Euro hit new two-week high in early European trading, pressuring initial resistance at 1.1479 (falling 30SMA) and focusing at more significant double-Fibo barrier at 1.1498/99 (38.2% of 1.1815/1.1302/61.8% of 1.1621/1.1302).
The pair extends rally from 1.1353 trough into third straight day with sustained break above 1.1498/99 pivots to generate strong bullish signal for extension of recovery phase from 1.1302 (31 Oct low) towards 1.1458 (daily cloud base).
North-heading momentum is entering positive territory on daily chart and supports the advance, with thinning daily cloud also expected to attract. Bulls may show hesitation at 1.1498/99 pivots on overbought conditions but positive sentiment keeps focus at the upside, with corrective dips expected to offer better buying opportunities. North-turning 10SMA marks pivotal support at 1.1390, loss of which would weaken near-term structure.
Res: 1.1479, 1.1499, 1.1545, 1.1558
Sup: 1.1450, 1.1424, 1.1390, 1.1353
