EUR/USD Fundamental Analysis: November 10, 2016
A day before the US presidential elections, the market exhibited little activity as market players expected a Clinton victory, with the EUR/USD pair going below the 1.1000 range due to an added strength in the USD. However, as Republican candidate Donald Trump slowly pulled off an unforeseen victory, the market panicked, with investors and traders at a loss on what to do with all the market confusion. Upon the advent of a Trump victory, the EUR/USD surged by up to 300 pips, however as the London trading session closed down and a Trump victory was slowly becoming a reality, the USD increased its strength and the EUR/USD started plummeting.
Aside from the fact that Donald Trump lacks political experience, the market is still in a state of confusion due to uncertainties with regards to his political plans. Trump’s victory has also greatly decreased the possibility of a Fed rate hike in December, especially since Trump has been an open critic of the Federal Reserve even during the start of the campaign period. The probability of a hike rate was up by 80% prior to the elections, but is now down to less than 50%, with majority of market players already expecting the rate hike’s cancellation.
The market’s general outlook is on the volatile side, and analysts are expecting the increased activity to continue for a day or two before finally settling down. Traders can opt to become spectators or risk buying the EUR/USD at strong support levels.