EUR/USD Has Reasons To Rally On Election Day

The EUR/USD is trading around 1.1400 in the European session, entrenched in a limited range. Americans go to the polls today to vote a new House of Representatives and elect 36 out of 100 members of the Senate.

Recent opinion polls and forecasts continue to show Democrats as favorites to win the House and Republicans to retain the Senate. There is a marginal uptick in Democrats’ chances.

A divided government may limit Trump’s policies on taxes, trade, and deregulation and may weigh on the US Dollar. However, it will not be a wild surprise at this point. A surprise Republican win in the lower chamber can send the US Dollar.

Apart from a potential Democrat win in the House that could weigh on the greenback, the EUR/USD has reasons to rise from the European side.

Italy and the European Commission are negotiating Italy’s budget for 2019 after the EC had rejected it. Italy’s Economy Minister Giovanni Tria came out of the Eurogroup meetings with some optimism. The euro zone’s third-largest economy will submit its response by November 13th. The optimism is USD-positive.

In the UK, Prime Minister Theresa May will convene her cabinet as Brexit talks seem to reach crunch time. The Irish border remains the most critical sticking point. Reports about an imminent deal have been denied by various officials and so have rumors about the potential resignation of Brexit Secretary Dominic Raab.

Positive Brexit headlines may push the Euro higher, as we have seen in the recent past.

German factory orders beat with 0.3% in September. Markit’s Services PMI’s are also eyed.

EUR/USD Technical Analysis

The pair is getting comfortable above the 50 Simple Moving Average on the four-hour chart, a bullish sign. Momentum is positive as well. The Relative Strength Index (RSI) is above 50, but below 70, not reflecting overbought conditions.