EUR/USD stabilizes circa 1.1920 post German election

EUR/USD has found equilibrium in thin market conditions around the 1.1920 level, with the tight win by Angela Merkel, who is set to secure her fourth term as German Chancellor, as the early driver in prices. 

Mild depreciation post-German election results

The pair saw an initial sharp decline towards the 1.19 area in interbank trading, a time in which retail platforms still remain closed. Following the initial depreciation, exhaustion set in, leading the rate to see a mild bounce towards the 1.1920-25. Today's downward pressure adds to the increased selling interest on the back of a more hawkish FOMC last week, announcing plans to reduce its balance sheet while sounding fairly optimistic on the continuation of its tightening campaign, which resulted in the chances of a rate hike by the Fed in Dec increase to over 70%.

EUR/USD technicals: Neutral stance

Valeria Bednarik, Chief Analyst at FXStreet, notes: "The pair presents now a neutral stance in the daily chart, as the price is stuck around a directionless 20 DMA, while technical indicators hold around their mid-lines, also showing no clear directional strength. The fact that the pair remains far above its 100 and 200 SMAs, keeps the long term risk towards the upside."

"Shorter term, and according to the 4 hours chart, the outlook is pretty much the same, as the price converges with its 20 and 100 SMAs, both lacking directional strength, and technical indicators heading nowhere right below their mid-lines" Valeria adds.