EUR/USD saw a sharp decline as reports of a strong early lead for Donald Trump in the U.S. election triggered heightened market volatility. The pair dropped from a high of 1.0937 down to a low of 1.0719 on EBS, reflecting nervousness among investors in an extremely thin trading environment. The early downward move in EUR/USD has brought the pair closer to key support levels, with October’s low of 1.0762 and June’s 1.0666 low now in focus. Large option expiries are positioned across several levels, including 1.0725 (€1.5 billion), 1.0750 (€900 million), and 1.0800 (€2.4 billion), which could help provide some containment of extreme price swings as the election results continue to trickle in.
Technical indicators currently lean bearish, with EUR/USD below several support levels, including the 5-, 21-, and 200-day moving averages. A break below the recent October low of 1.0762 could open the door for further declines towards 1.0666, the June low, which may become a key target for sellers if volatility persists. However, should EUR/USD manage to stabilize above 1.0725, it may indicate that option expiries and volatility concerns are helping to stabilize price action in the short term.
Traders should prepare for sustained volatility as the U.S. election results continue to unfold, particularly given the possibility that final results might not be clear for some time. In the event of any uncertainty in election results, EUR/USD could see further bearish pressure, potentially driving it toward lower support levels. Conversely, a stabilization of risk sentiment or clearer election results could help the euro recover some lost ground, particularly if broader USD weakness resumes.