The euro (EUR) fell below 1.05 overnight, but the decline was short-lived. OCBC’s FX analysts Frances Cheung and Christopher Wong stated that it was last seen at 1.0568.

EUR will continue to be negatively affected by US election results

“Daily momentum is bearish, but the RSI is showing tentative signs of returning from near-oversold conditions. Consolidation is not ruled out in the near term, but sales are trending upward. Resistance 1.06, 1.0740 (76.4% fibo retracement of 2024 low to high), 1.0780 (21 DMA). Support at 1.05, 1.0450/1.05 levels.”

“Overall, the EUR should continue to bear the brunt of the US election results. Trump’s presidency will lead to changes in US foreign trade policies. “The potential 20% tariff (if implemented) could hurt Europe, where growth is already slowing and the US is the EU’s biggest export destination.”

“In German politics, the minority government faces economic and diplomatic difficulties. Prime Minister Scholz wants a vote of confidence on December 16 instead of January 15, but he is expected to win. Early elections are likely to be held on February 23. Elsewhere, wide EU-UST yield spreads continued to widen, confirming the “fair value” of the EUR relative to yield spreads.”