What was feared is now official: Donald Trump was elected U.S. President.
What a thrilling election night! The results showed a much closer contest than expected. Markets are even more nervous as Republicans maintained their control of both the Senate and the House. It is perhaps a little like the Brexit vote in June when many analysts and market participants could not imagine that Britons would finally vote for an exit of the EU. And then it happened: Brexit.
Today it is the same scenario and the unimaginable becomes real. Trump showed surprising strength over Clinton, shocking financial markets. The impact of a Trump presidency on the U.S. economy is yet uncertain and it is precisely this uncertainty that worries the market. As a trader however, we are not influenced by political developments as long as there is some volatility to drive our trades.
As a result, we are looking back at a profitable trading night with the euro rising towards 1.1270, providing euro bulls a good profit of 128 pips by our long-entry. The British pound lagged behind as the upward momentum of the currency was initially limited by the future Brexit outlook.
EUR/USD: The euro was showing an upward trend this morning and based on this initial trend we were looking for higher targets at 1.1340, 1.1370 and 1.1420. However, now that the euro had given up all of its election gains the bias hasn’t essentially changed in favor of the euro bulls. As we are skeptical about a sustained upward trend in this pair we will now focus on a break below 1.1025. In order to expect further upward momentum the euro would need to break above 1.1175 again.
GBP/USD: The pound benefited from the sharp sell-off in the U.S. dollar. A next resistance is seen at 1.2550 while a break above that level may invigorate fresh bullish momentum towards 1.2670. Sterling bears should however wait for a break below 1.2350 in order to sell the pound.
Here are our daily signal alerts:
EUR/USD
Long at 1.1286 SL 25 TP 20, 40
Short at 1.1189 SL 25 TP 17, 40
GBP/USD
Long at 1.2525 SL 25 TP 20, 70
Short at 1.2410 SL 25 TP 15, 40
We wish you good trades and many pips!
Disclaimer: Any and all liability of the author is excluded.