Euro posts modest gains against US Dollar as US Midterm elections draw near

• Euro edges up against the US Dollar as caution prevails before US midterm elections.
• A 70-72% probability of Democrats winning both the House and the Senate is cited by ING.
• US JOLTS Job Openings and preliminary Eurozone HICP figures are also in focus for investors.

At around 1.1195, the Euro (EUR) is marginally firmer against the US Dollar (USD) in Tuesday’s European session. Caution ahead of the United States (US) midterm elections later in the day is weighing on the US Dollar, allowing EUR/USD to edge higher.

The US Dollar Index (DXY) stands slightly lower near 101.73 at the time of writing. The index tracks the Greenback against a basket of six major currencies.

Dollar faces uncertainty as US midterm odds favour Democratic sweep

This week’s principal event risk for FX is the US midterm elections, according to ING’s Chris Turner. He notes that betting markets now assign the Democrats a “70-72% chance of taking both the House and the Senate.” In his view, “one could make the case that the Dollar should come lower on such an outcome,” since a Democratic clean sweep would likely “lead to gridlock on the debt ceiling, a prolonged government shutdown next year and could encourage President Trump to pursue an even more activist foreign policy agenda.” Turner therefore suggests that investors will balance these political risks against factors that continue to support the Dollar and DXY around the 102.00 area: robust US growth, inflation above target and continued Fed tightening.

September’s JOLTS Job Openings figures are the next focus on the economic calendar, with publication scheduled for 15:00 GMT. Estimates suggest US employers advertised 7.13 million new vacancies, a modest increase from August’s 7.097 million.

Wednesday brings the Eurozone’s preliminary Harmonised Index of Consumer Prices (HICP) figures for October. Investors expect the release to have a substantial influence on expectations for European Central Bank (ECB) monetary policy.

Headline HICP growth is forecast to remain at 3.9% year on year (YoY), above September’s 3.8%. Meanwhile, the core measure, which excludes volatile items such as food, energy, alcohol and tobacco, is expected to hold at 2.5% YoY.

EUR/USD Retains Bearish Bias Below 20-Day EMA

Trading at 1.1187 on the daily chart, EUR/USD retains a bearish short-term bias while the spot price remains below the 20-day exponential moving average (EMA) at 1.1214. Its position beneath this near-term trend indicator suggests that rebounds remain constrained. At around 42, the Relative Strength Index (14) points to easing downward pressure without signalling oversold conditions.

The 20-day EMA at 1.1214 provides the first resistance on the upside. Only a sustained move above it would soften the prevailing bearish tone and make room for a more constructive recovery. As the current dataset offers no clearly defined support levels nearby, traders may turn to price behaviour around recent lows to assess whether selling pressure returns or consolidation takes precedence.

(The technical analysis of this story was written with the help of an AI tool. Know more.)