EUR / USD around 1.1703 amid US elections

• EUR / USD is clinging to the 1.7 zone on Biden’s anticipated win.
• COVID-19 is a big problem for the euro bulls.

The EUR/USD It is currently trading at 1.1703 between a low of 1.1630 and a high of 1.1740, an increase of 0.54% at the time of writing in anticipation of the so-called blue wave (a broad victory for the Democratic Party).

In large part due to its negative impact on the US dollar, a competitive win for Joe Biden would be positive for the euro.

As such, with polls pointing to such a scenario, the euro has risen decisively this week from a low of 1.1627 (reached after a heavily dovish European Central Bank and risks of COVID spread) to a high of 1.1739, on track. of a test the psychological level 1.18.

Much of the bad news contributed to the fall of the dollar. However, a favorable market outcome can only have a short-term useful life to support the euro if sentiment deteriorates further for the eurozone economic recovery.

Apart from this, a Biden victory is also optimistic for the prospects of a quicker end to the virus that could undermine the euro if investors are of the opinion that the US will recover much faster than the eurozone.

Spread of COVID-19, a risk for euro bulls

The European Central Bank has previously committed to act in December and does not rule out using all available instruments.

However, the spread of the virus and subsequent shutdowns could be catastrophic for eurozone politics and make investors nervous again.

There are still many things that can go wrong for the nations of Europe that are enduring what is now a second wave of the epidemic that may have only just begun.

For example, just today, France reported the highest death toll since April and both the Netherlands and Hungary have announced new virus lockouts.

Also, on the eurozone front, we are in for a very quiet week, with September retail sales on Thursday expected to have a negligible impact on the euro. So the emphasis remains on the spread of the virus.

This could cripple the coin to some extent regardless of the outcome of the election and leave the focus on higher beta currencies such as the AUD. Comparatively, the euro has traded higher in line with the AUD, especially from a market positioning point of view.

However, on the other hand, a contested election or even a market surprise with current US President Donald Trump winning the election, there is much more at stake where the euro could really take off.

Both EUR / USD and EUR / JPY could end up looking into the abyss if anything other than a Biden win were to happen, as illustrated in the following technical analysis:

Technical levels