EUR/USD Fundamental Analysis
In the previous European trading session, the Euro won versus the US dollar before the result of the US presidential election, causing uncertainties as to what would happen to the fiscal cliff; And while markets seem to focus more on the US elections, the Greek parliament vote on fresh austerity measures could emerge as an equally key event, which is seen to drag down the single currency in today’s European trades.
President Barack Obama defeated Mitt Romney in a very tight race, earning himself a second term in the White House. Faced with many economic challenges, Obama would guide the economy to the path of recovery during his term as president. But the Buck is projected to fall versus the shared currency on speculations that the Federal Reserve would remain loose on its monetary policy under Obama. With the possibilities that the Fed would continue with its dovish monetary policy, gains of the shared currency versus the US dollar are likely to be limited.
In a seemingly crucial event like the US presidential election, the Greek parliament is set to vote on a new round of austerity measures which are seen as vital for the indebted country to receive the next tranche of bailout funds, otherwise it would run out of cash by November 15. Greek Prime Minister Antonis Samaras urged the parliamentarians to vote for the fresh austerity measures to prevent a catastrophe to happen in Greece. But as the future of Greece in the Euro Zone is once again at stake, chances are investors would shun risk and seek refuge from safer assets. With the Euro region entering another phase of uncertainty, the single currency is expected to weaken versus the Greenback. Thus, a short position is suggested for the EURUSD pair in today’s European exchanges.
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