The overnight low touched 1.1302, coming close to the year's low of 1.1301 and failing to break reported barrier options at 1.1300. For sellers, it's a case of "close but no cigar" just yet. Despite the rebound in price today, buyers are not in the driver's seat. That still belongs to sellers as price continues to hover below the key hourly moving averages; indicating that near-term bias remains bearish.
The pair has been struggling to get above the 100-hour MA (red line) as sellers remain defiant to maintain the near-term bearish bias and that will be a key level to eye in the session ahead. November promises to be a tricky time for the pair fundamentally and right now we're also at what can be construed as a technical crossroad.
The move towards the 1.1300 handle overnight now starts to form a double-bottom pattern if put together with the August low and technically, it's a good setup for a bounce - provided that the near-term levels start to break higher as well. And that is where the hourly chart comes in handy; focus on the two key hourly moving averages.
However, fundamentally the euro continues to struggle as Italy's debt/budget situation is still not sorted out with the deadline for Italy to respond to the European Commission being 13 November. Then, we have the case of faltering economic data from the Eurozone as growth continues to flag heading into Q4. That's also weighing on the single currency.
But let's not forget that we have the US midterm elections next week on 6 November. Voting begins then and results will come in during the early hours of 7 November. Republicans currently hold the majority in both the House and Senate and although historically the president's party tends to lose seats during the midterms, more focus will be paid attention to any losses suffered this time around because it is Trump after all.
Regardless, that presents a risk to the dollar as there is an element of uncertainty on how markets will digest the results of the midterms. Stocks are likely to rally no matter what the outcome may turn out be, but expect the dollar to have a more mixed reaction when trying to digest the news if the Democrats win over the House.
With risks to the euro and the dollar at play as we begin the month, expect the sentiment above to drive price action in EUR/USD over the next week or so. In particular, the risks to the dollar will be the much bigger factor to pay attention to.