EURUSD to be Driven by Eurozone Economy as Well as US Elections
EURUSD price, news and analysis:
- The EURUSD pair’s near-term movements will likely be driven by today’s US mid-term elections.
- However, signs of a more stable Eurozone economy are emerging too and that could influence the pair once the elections are over.
Eurozone economy to influence EURUSD
The near-term direction of the EURUSD price will likely be determined by the results of today’s US mid-term elections, as well as the US-China trade dispute and the re-imposition by the US of sanctions on Iran.
However, traders in the pair should also keep an eye open for developments on the Euro side of the equation as signs emerge of a modest economic recovery although the EU row with Italy over its budget shows little sign of abating.
Broadly speaking, a strong showing by US President Donald Trump’s Republican Party would likely boost the USD while gains for the Democrats would likely weaken it. However, the latest economic data from the Eurozone are mildly positive for EURUSD, which has risen from the 2018 low at 1.1301 touched on August 15.
EURUSD Price Chart, Daily Timeframe (Year to Date)
Data released by Germany early Tuesday showed industrial orders up by 0.3% month/month in September instead of falling by 0.5% as market analysts had expected. Moreover, final data for the Eurozone composite purchasing managers’ index in October showed a rise to 53.1, up from the 52.7 flash estimate.
That is still the lowest figure since September 2016 and the ongoing dispute between the EU and Italy over the Italian budget led to another increase in Italian bond yields Tuesday. Moreover, Eurozone economic growth remains subdued, with momentum seemingly weakening.
However, the data suggest that the climb in EURUSD from the 1.1302 low touched on October 31 could extend higher once the US election results are out of the way.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.