EUR/USD supported in a tight pre-US election range

• EUR/USD holds in a tight range as markets get set for the US elections.
• A Blue wave outcome could give the single currency a lifeline in the face of the Spread of COVID-19.

EUR/USD is currently trading at 1.1630 having travelled between a range of 1.1622 and 1.1655 while markets brace for the US elections on Tuesday and in anticipation of a Blue wave,  (i.e. a Biden landslide victory).

Moves in the FX space are likely to be driven by the greenback in and around the election result which puts less of an emphasis on the eurozone's economy and spread of the virus for a short while.

In recent weeks, since mid-October, a broadly less supportive risk appetite has been supportive of the greenback despite the prospects of a Blue Wave and a larger scale fiscal stimulus package. 

A short squeeze is taking effect as risk assets become pressured. However, this only gives rise to the prospects of a less pronounced net-short positioning into the vote and thus the risk of a deeper correction on a market-friendly outcome. 

Then again, a surprise win by President Trump could create a material short-squeezing effect in the greenback which should exacerbate the positive impact on the safe-haven greenback. In such a scenario, the euro would be heavily exposed. 

EUR/USD levels