In light of recent developments, particularly the election victory of Republican candidate Donald Trump, market sentiment has shifted significantly. As anticipated in my previous analysis, this outcome has fueled optimism, contributing to a further decline of the EUR/USD pair by over 130 pips.
The so-called "Trump trade" continues to support the strength of the USD, as the Republican sweep of both the House and Senate clears the way for the implementation of Trump's policy agenda. From a foreign exchange perspective, this is likely to result in increased fiscal spending, tariffs, and tighter immigration rules. These factors are expected to sustain the DXY (Dollar Index), along with upward inflation pressures that could keep interest rates higher than previously projected.
From a technical standpoint, the bearish trend remains firmly in place across all timeframes:
Daily (D1) Chart: The price action recently broke below the lower boundary of a two-year-old neutral rectangle at approximately 1.0670. This breakout signals further downside potential, with the next key support level at 1.0500, which I expect to be tested by the end of the year.
Weekly (W1) Chart: The price action failed to break below the important support level 1.0640. If this level is breached, the next support at 1.0450 comes into play, indicating the potential for further declines.
Monthly (1M) Chart: Notably, an interesting pattern emerges from historical performance in the last three months of election years. In years when a Democratic candidate won (2012, 2020), the EUR/USD recorded an approximate rise of 4.8%. Conversely, during Donald Trump’s first presidency in 2016, the EUR/USD fell by 4.6% during the same period. If this pattern holds for the October-December timeframe of 2024, we could see the EUR/USD reach levels as low as 1.0425 before a potential correction at the beginning of 2025.
As you've likely heard many times recently - the next few weeks will be critical - in determining whether these levels hold or if we see a more significant breakdown.
The so-called "Trump trade" continues to support the strength of the USD, as the Republican sweep of both the House and Senate clears the way for the implementation of Trump's policy agenda. From a foreign exchange perspective, this is likely to result in increased fiscal spending, tariffs, and tighter immigration rules. These factors are expected to sustain the DXY (Dollar Index), along with upward inflation pressures that could keep interest rates higher than previously projected.
From a technical standpoint, the bearish trend remains firmly in place across all timeframes:
Daily (D1) Chart: The price action recently broke below the lower boundary of a two-year-old neutral rectangle at approximately 1.0670. This breakout signals further downside potential, with the next key support level at 1.0500, which I expect to be tested by the end of the year.
Weekly (W1) Chart: The price action failed to break below the important support level 1.0640. If this level is breached, the next support at 1.0450 comes into play, indicating the potential for further declines.
Monthly (1M) Chart: Notably, an interesting pattern emerges from historical performance in the last three months of election years. In years when a Democratic candidate won (2012, 2020), the EUR/USD recorded an approximate rise of 4.8%. Conversely, during Donald Trump’s first presidency in 2016, the EUR/USD fell by 4.6% during the same period. If this pattern holds for the October-December timeframe of 2024, we could see the EUR/USD reach levels as low as 1.0425 before a potential correction at the beginning of 2025.
As you've likely heard many times recently - the next few weeks will be critical - in determining whether these levels hold or if we see a more significant breakdown.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.