EUR/USD Tests Resistance as Democratic Sweep Weighs on Dollar

The euro pushed higher during Asian and early European hours, reaching 1.1260 overnight before settling back around 1.1248 as markets digested the US midterm election outcome. Prediction markets swung decisively toward a Democratic clean sweep of Congress, with control probabilities climbing above 90% from 75% before voting closed. The dollar index slipped to an overnight low of 101.25, with the move extending across Asian trade as concerns mounted that tighter regulation under Democratic control could slow the pace of artificial intelligence infrastructure investment. That shift in sentiment has pulled tech stocks lower and dragged Treasury yields with them, creating a less supportive backdrop for the greenback.

The currency pair is now testing the upper boundary of the downtrend channel that has governed price action since early October. Technical indicators show daily momentum improving while weekly readings remain oversold, suggesting scope for further gains if resistance gives way. The initial market reaction to the election results is being partially reversed as participants acknowledge that the new Congress takes office only in January, and that a resilient US economy still argues for further Federal Reserve tightening. Markets are currently pricing roughly 60 basis points of rate hikes by mid-2027, down from nearly 100 basis points several weeks ago.

What the calendar says

The economic calendar puts two major US data points in focus this week. On 6 November at 12:30 UTC, the Bureau of Labor Statistics releases the October nonfarm payrolls report. Labour market figures have come in on the strong side so far this week, and another robust print would lift rate-hike expectations and provide support for the dollar. A weaker-than-expected release would add to the pressure the greenback is already facing from the election outcome.

Four days later, on 10 November at 12:30 UTC, October consumer price inflation data crosses. Energy prices are expected to drive the headline figure, while core inflation will be watched closely for signs that persistent price pressures require a more aggressive policy response. Any upside surprise in core CPI would lift short-dated yields and could reverse some of the dollar's recent weakness, particularly if it shifts expectations for the December meeting.

Today also brings the eurozone flash CPI for October and the quarterly Treasury refunding announcement at 13:30 UTC. Core inflation in the euro area is expected to hold steady at 2.5% year-on-year. The refunding statement will clarify how the Treasury intends to manage issuance across the curve; any suggestion that the short end will absorb more supply could unsettle rates markets.

Technical picture

The EUR/USD chart shows price consolidating just below 1.1250 after testing that level overnight. Resistance sits in a band from 1.1250 to 1.1270, the latter marking the weekly high set on 16 October. A close above this zone would open the path toward 1.1325, the swing low recorded on 24 June, with the 38.2% Fibonacci retracement of the October–August decline at 1.1340 just beyond.

Support has lifted to 1.1200, the level that capped price through much of last week. Below there, congestion around 1.1150 and the 50% retracement at 1.1130 define the lower boundary of the recent range. The year-to-date low sits at 1.1110–1.1115, established between 14 and 29 October. Daily stochastics are already in overbought territory, which may limit the initial test of higher resistance and invite consolidation or profit-taking once the 1.1270–1.1325 zone comes into view.