EUR/USD – Euro Keeps on Sliding After Trump Win

EUR/USD continues to post losses on Monday, as the pair is trading at 1.0760. On the release front, it’s a very quiet start to the week. Eurozone Industrial Production declined 0.8%, edging above the forecast of -0.9%. As well, ECB President Mario Draghi will speak at the Italian Treasury in Rome. There are no US releases on the schedule. Tuesday will be busier, as Germany releases Preliminary GDP and ZEW Economic Sentiment. The US will publish retail sales reports.

The markets went on a wild roller-coaster ride last week, following the stunning news that Donald Trump had won the US presidential election. Political convention was sent on its head, as most pundits had predicted that Hillary Clinton would win the White House. Trump’s election victory which has already been labeled the most stunning win in US election history, sent shock waves across global markets to an extent not seen since the Brexit vote in June. The dollar initially sagged after the election results, but recovered strongly. EUR/USD slipped 2.2% last week and remains under pressure. Currently, the pair is trading at its lowest level since early January.

As the dust begins to settle and the shock wears off from last week’s US election, investors and traders are asking what will a Trump election mean for the markets. Like much of his agenda, Trump’s economic platform is unclear. According to Bank of America Merrill Lynch, given that both houses of Congress are under Republican control, we could see Trump opt to loosen fiscal policy. This would lead to greater spending, causing more inflation. In turn, interest rates would move higher and bolster the US dollar. However, Trump remains an enigma, having never held public office. His ideology is unclear (if he has one), so the markets could be in for a period of uncertainty, at least in the early stages of the Trump administration. This could lead to prolonged volatility in the currency markets. As far as monetary policy is concerned, the odds of a rate hike in December also showed some volatility immediately after the election, but have jumped to a remarkable 85 percent, as the markets are very confident that the Fed will raise rates for the first time since last December.

Dollar Keeps Rising After Trump Elected President

EUR/USD Fundamentals

Monday (November 14)

  • 10:00 Eurozone Industrial Production. Estimate -0.9%. Actual -0.8%
  • 15:00 ECB President Mario Draghi Speech

Tuesday (November 15)

  • 7:00 German Preliminary GDP. Estimate 0.3%
  • 10:00 German ZEW Economic Sentiment. Estimate 7.9
  • 13:30 US Core Retail Sales. Estimate 0.5%
  • 13:30 US Retail Sales. Estimate 0.6%

*All release times are EDT

* Key events are in bold

 

EUR/USD for Monday, November 14, 2016

EUR/USD November 14 at 11:30 GMT

Open: 1.0822 High: 1.0826 Low: 1.0726 Close: 1.0761

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0462 1.0557 1.0708 1.0821 1.0957 1.1054
  • EUR/USD has posted slight losses in the Asian and European sessions
  • 1.0708 is providing support
  • There is resistance at 1.0821

Further levels in both directions:

  • Below: 1.0708, 1.0557 and 1.0462
  • Above: 1.0821, 1.0957, 1.1054 and 1.1150
  • Current range: 1.0708 to 1.0821

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Monday session. Currently, short positions have a majority (62%), indicative of trader bias towards EUR/USD continuing to move lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.