- EUR/USD has been edging up amid hopes for US fiscal stimulus.
- Eurozone coronavirus cases and political uncertainty are holding the currency pair back.
- Tuesday's four-hour chart is showing an improved position for the bulls.
There is nothing like a deadline to sharpen minds – and there is a growing chance for a large fiscal stimulus package in the US. Stcoks are attempting recovery and the safe-haven dollar is on the back foot, allowing EUR/USD to rise.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have expressed optimism and have noted that the gap is "narrowing" after holding a long call on Monday. Democrats wanted a bill worth around $2.2 trillion while the White House's offer came short of the $2 trillion mark.
Pelosi set to Tuesday as the deadline to reach a deal – talks have been dragging on for months and the elections are due in exactly two weeks. Will white smoke come out of Capitol Hill?
President Donald Trump has been eager to reach a deal lately, but opposition within his own party. Senate Majority Leader Mitch McConnel is set to push through a sub $1 trillion bill through the upper chamber. Chuck Schumer, his Democratic counterpart also retorted that current GOP offers are "unacceptable."
Will Trump push for a deal and can he impose his will? That remains an open question. Markets are set to seize on any hint if an agreement is coming or not.
Opinion polls are little moved ahead of the elections, with Trump trailing rival Joe Biden by 8.9% according to RealClearPolitics, while models by The Economist and FiveThirtyEight are averaging a 90% chance for a change at the top. The Senate race – which is critical for passing new relief packages – remains close, with around 74% according to the models.
Source: FiveThirtyEight
See 2020 Elections: Seven reasons why this is not 2016, time to focus on the Senate
Few surveys are likely to come out ahead of the second and last presidential debate late on Thursday. The commission responsible for the encounters announced that the candidates will receive two minutes of uninterrupted time in every segment – muting their rival's microphone.
The top topic in the elections is a coronavirus, which is spreading in the US and more rapidly in Europe. Ireland and Wales announced new restrictions, while Belgian officials fear a "tsunami" of infections.
Source: FT
Christine Lagarde, President of the European Central Bank, raised concerns of a slowdown stemming from this second wave. The ECB announces its decision next week, and for now, no new measures are anticipated. However, additional COVID-19 statistics and lockdown news may push the Frankfurt-based institution to action.
John Williams, President of the New York branch of the Federal Reserve, will speak later in the day. Williams is considered No. 3 at the bank, but he is unlikely to rock the boat ahead of the elections. Building Permits and Housing Starts figures for September are also due out on Tuesday.
Overall, the focus is on fiscal stimulus, but coronavirus concerns could take over at some point.
EUR/USD Technical Analysis
Euro/dollar has managed to rise above the 50, 100, and 200 Simple Moving Averages on the four-hour chart ~ a bullish development. Momentum has also turned positive while the Relative Strength Index is below 70, outside overbought conditions.
All in all, bulls are in control.
Resistance awaits at 1.1795, Monday's peak, followed by 1.1830, which is October's top. The next line to watch is 1.1870.
Support is at 1.1720, which is a swing low last week, followed by 1.1685, a double-bottom. Further below, 1.1625 awaits EUR/USD.
More Big move coming in EUR/USD? Fiscal stimulus and coronavirus are the keys
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD clings to recovery gains below 0.6550 on weaker USD, upbeat mood
AUD/USD holds sizeable gains below 0.6550 in the Asian session on Monday. A sharp pullback in the US bond yields prompts some US Dollar profit-taking after US President-elect Trump named Scott Bessent as Treasury Chief. Moreover, the upbeat market mood supports the risk-sensitive Aussie.
USD/JPY trims losses to regain 154.00 as USD sellers pause
USD/JPY trims losses to retest 154.00 in the Asian session on Monday. Retreating US Treasury bond yields drags the US Dollar away from a two-year top high and drives flows towards the lower-yielding Japanese Yen, though the BoJ uncertainty could limit losses for the pair.
Gold: Is the tide turning in favor of XAU/USD sellers?
After witnessing intense volatility in Monday's opening hour, Gold's price is licking its wounds near $2,700. The bright metal enjoyed good two-way trades before sellers returned to the game after five straight days.
Elections, inflation, and the bond market
The Federal Reserve believes inflation is no longer a concern for consumers and the time has come to ensure the rate of change of prices does not decline any further.
Read more
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.