While there were no big market movements Tuesday, both EUR/USD and GBP/USD ended the trading day in higher territory. Reason for the upward tendency was a weakening U.S dollar which traded at its lowest since February 2018 against its major peers. Georgia senate runoff election results contributed to the dollar’s weakness and selling pressure could accelerate if democrats take control of the senate by winning two seats in the Georgia election runoff. If, however, senate republicans maintain their majority, the dollar could strengthen. Key elections in Georgia serve as an important catalyst in the market as they will decide which party controls the U.S. Senate for the next two years, setting the scope of President-elect Joe Biden’s agenda.
The results are expected today, so we might see some volatile movements in USD crosses.
Technically, we saw the euro surging to a high of 1.2326 amid broad-based dollar weakness but with the election results still to be announced, the pair rebounded from its highs. Traders now might pay attention to a price breaks either above 1.2350 or below 1.2250 but higher volatility should nevertheless be taken into account.
The cable bounced off the 1.3650-hurdle but a renewed rise above 1.3630 could prompt the pair for a break above 1.3650 and lead to another test of 1.37 or even 1.3740. On the downside we see an important support around 1.3450.
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