Joe Biden is one step away from winning the elections.
He now only needs 6 electoral votes, which he can get from the state of Nevada. So far, Biden already has an advantage there, however, the count has not yet been officially completed. As of the morning of November 5, only 75% of the votes have been counted, about 49.3% from which (588,252) were for Biden, while the remaining 48.7% (580,605) were for Trump. The remaining 15% is very crucial as it could tip the scales in any direction.
One of the things that greatly depends on the outcome of the elections is the long-awaited coronavirus relief bill, which until now has not yet been decided in the Congress. However, agreeing on the terms of the bill will remain a serious problem, since even if Biden wins, his party has to seize the majority in both chambers of the Congress. If not, political confrontations between the opposing parties may occur, which will lead to the sharp downfall of the US dollar.
But there are still those who predict that the US dollar will collapse (by about 5.0%) as long as Biden wins the elections. They expect such a scenario to happen because the prospects of the global economy will become less tense, and Donald Trump's protectionist policies will cease to be a headache to many US trading partners. This will put hard pressure on the US dollar, however, there is still the scheduled meeting of the Federal Reserve System today, at which decisions on a more restrained policy may be made, which will support the US dollar. If the Fed increases the government's fiscal stimulus measures, chances are, key interest rates will also increase in the future.
But if the central bank decides to take a wait and see attitude, the market will experience very limited impact.
With regards to economic statistics, a report from the Institute for Supply Management was published yesterday, the data of which indicates that a slight decline was observed in the service sector, but not as significant as in the eurozone countries. According to the report, activity in the US services sector continued to grow in October 2020, albeit at a slower pace. This is due to restrictive measures imposed amid the worsening situation with the coronavirus.
Thus, US Services PMI fell to 56.6 points in October, against 57.8 points in September. Economists had expected the index to be at 57.5 points. Nonetheless, index values above 50 indicate an increase in activity.
Meanwhile, the latest data on the US foreign trade deficit was not much different from the forecasts, thus, the market was not really affected by the latest figure. The report published by the US Department of Commerce said the deficit narrowed in September, on the back of continuing recovery in exports and a slowdown in import growth. It to $ 63.86 billion against $ 67.04 billion in August, while economists had expected $ 63.6 billion. Exports jumped immediately by 2.6%, to $ 176.35 billion, while imports rose by 0.5%, to $ 240.22 billion.
As for the technical picture of the EUR/USD pair, the bulls need to break the resistance level of 1.1765, as only by that will the quote be able to reach the 18th and 19th figures. There, intermediate resistances will be the highs of 1.1814 and 1.1864, but Joe Biden's victory will ensure a breakout to the highs of 1.1915 and 1.1965. However, the euro could still decline to 1.1604 if the quote returns to the 17th figure. A breakout from this range, similar to the breakdown of 1.1765, will strengthen the bear market, which will push the euro to the lows 1.1540 and 1.1480.
