EUR/USD: back to fundamentals after the US elections

EUR/USD is trading at 1.1039, down -0.91% on the day, having posted a daily high at 1.1111 and low at 1.1027.

The single currency has taken a hit with markets backing the bid in the greenbck on the FBI news and speculation of a Clinton victory in the US election's tomorrow. At the same time, markets are looking through and beyond these elections with a return of fundamentals in the divergence between the ECB and Federal Reserve tipped to hike rates in December.

"The ECB is weighing possible steps to extend QE, the Bank of Italy’s deputy governor remarked today," noted analysts at Scotiabank, adding, "We expect an announcement on QE continuing after the current March deadline at the December 8th policy meeting, just before we expect the Fed to announce a 25bps rate increase (December 14th FOMC)." However, on a Trump victory, the euro could attract some serious demand with the 200 dma located at just 150 pips away, the 1.12 handle guards late summer highs through 1.1300.

EUR/USD levels

The analysts at Scotiabank explained that they continue to target a fall to 1.05 for spot EUR/USD around year-end. "We see support at 1.1030 now but look for weakness below here to push EUR/USD quickly back to the low/mid 1.09s."

Meanwhile, current price is 1.1039, with resistance ahead at 1.1059 (Daily Classic S2), 1.1064 (Hourly 20 EMA), 1.1069 (Daily Open), 1.1073 (Weekly Classic PP) and 1.1080 (Yesterday's Low). Next support to the downside can be found at 1.1037 (Daily Classic S3), 1.1036 (Daily 20 SMA), 1.1027 (Daily Low), 1.1008 (Hourly 200 SMA) and 1.1003 (Weekly Classic S1).