EUR/USD rises to 1.0900 ahead of US presidential election | 04 November 2024

EURUSD:

The EUR/USD pair is recovering from the losses incurred in the previous session, trading at around 1.0880 during Asian hours on Monday. The increase in the value of the pair is attributed to a decline in the value of the US dollar following the release of non-farm payroll data for October that was less robust than anticipated. However, the uncertainty surrounding the US presidential election may lead to a shift in investor sentiment, which could limit the potential for EUR/USD growth.

On Friday, data from the US Bureau of Labor Statistics (BLS) showed that the October NFP rose by just 12,000, following a revised September gain of 223,000 (up from 254,000). This figure is well below market expectations of 113,000. Meanwhile, the unemployment rate remained at 4.1% in October, in line with market expectations.

The latest New York Times/Siena College poll, cited by Reuters, indicates that Democratic candidate Kamala Harris and Republican candidate Donald Trump are in a close contest in seven battleground states just two days before the US presidential election.

The poll indicates that Vice President Kamala Harris has a slight advantage in Nevada, North Carolina, and Wisconsin, while former President Donald Trump has a slight advantage in Arizona. In Michigan, Georgia and Pennsylvania, the two candidates are in a close race. The poll, conducted between 24 October and 2 November, indicated that all results in these states were within the margin of error of 3.5%.

The euro received a boost from stronger-than-expected economic growth in the third quarter and higher-than-expected inflation in the Eurozone. This prompted traders to revise expectations for a larger-than-usual rate cut by the European Central Bank (ECB) in December. The markets have already factored in a 25-basis-point cut in the ECB's deposit rate in December, which would mark the fourth rate cut this year following reductions in October, September and June.

The preliminary data indicated that the Harmonised Index of Consumer Prices in the Eurozone increased to 2.0% year-on-year in October, representing an increase from the previous 1.7% and exceeding the projected 1.9%. Meanwhile, the annualised core inflation rate remained unchanged at 2.7%. Additionally, Eurozone gross domestic product (GDP) grew by 0.4% quarter-on-quarter in the third quarter, representing a doubling of the growth seen in the second quarter and exceeding expectations of 0.2%.

Trading recommendation: We follow the level of 1.0900, when fixing above it we consider Buy positions, when rebounding we consider Sell positions.

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