EUR/USD Weekly Forecast: Greenback holds firm despite looming US political stalemate

The EUR/USD pair finished the first week of November trading around 1.1140 after spending pretty much a month ranging around 1.1200. Critical headlines were partially overshadowed by persistent uncertainty, with the pair leaning bearish but still trapped.

The US Democratic Party took control of Congress after mid-term elections.

A de-escalation in the Middle East fell short of cooling markets’ concerns.

EUR/USD holds rangebound, but bearish pressure keeps mounting.

United States mid-term elections The US Dollar (USD) weakened throughout the first half of the week, in anticipation of a Democratic victory in the United States (US) mid-term elections.

The Greenback fell further late on Wednesday, once markets knew the Republican Party got smashed, as Democrats' gains were far greater than most forecasts.

The Unemployment Rate shrank to 4.1%, also better than expected, while the participation rate ticked higher, from 61.8% in September to 61.9%.

Europe to hike rates again Things ont the Old Continent don’t look good: Eurozone inflation rose to a three-year high of 4% in October, driven by food and energy costs, and is expected to keep climbing in the upcoming months, backing the case for a rate hike in December.

Focus turns to inflation The new week starts with the US publishing the October Consumer Price Index (CPI) on Tuesday, while Germany will publish the final estimate of the October Harmonized Index of Consumer Prices (HICP) on Wednesday.