EUR / USD Forex signal: consolidation should continue
The pair will likely stay in this range today as markets await the official German election results.
EUR / USD was little changed in the morning as the market reflected on the German election and the potential power vacuum. It is trading at 1.1722, slightly above Friday’s low at 1.1700.
Germany conducted its elections on Sunday which produced no clear winner. In the aftermath of the election, both Olaf Scholtz and Armin Laschet claimed victory. A public broadcaster put Armin’s Social Democratic Party in the lead with a 25.8% lead.
Yet what is clear is that it will likely take a few days or even weeks for the country to find out who will replace Angela Merkel in power for 16 years. In addition, the results mean that the country will have a three-way coalition. Coalition formation will likely take months as the major parties bridge their many differences.
EUR / USD reacted moderately to the election results as they were in line with what most polls had predicted. In addition, it is likely that the policies of the likely leader will not have an immediate difference from those of Angela Merkel.
Meanwhile, in the United States, the market will reflect on the ongoing debt ceiling negotiations as the September 30 deadline approaches. Divisions have emerged among Democrats over how to raise the debt ceiling.
Most Republicans have said they will vote against any bill to raise the debt ceiling. If a breakthrough is not achieved, there is a likelihood that a government shutdown will occur. In the extreme zone, the US Treasury will have difficulty paying the country’s debt, which will affect its credit rating.
EUR / USD will react to the latest US durable goods order numbers. These are important figures which give an idea of the economy of the country.
EUR / USD forecast
EUR / USD was in a narrow range during the morning session as investors pondered the outcome of the German election. It is trading at 1.1725, which was lower than last week’s high of 1.1750. On the four-hour chart, the pair has moved towards the midline of the Bollinger bands and is located slightly below the Ichimoku cloud.
At the same time, the MACD indicator has followed an upward trend. Therefore, the pair will likely stay in that range today as markets await the official German election results.