EUR/USD Forecast: Euro Trump-ed up, but not for long, coronavirus set send it below support

• EUR/USD has been holding up above 1.17 amid fresh hopes for a US fiscal stimulus deal.
• Fears of a double-dip recession are gripping the old continent. 
• Monday's four-hour chart is painting a bearish picture. 

President Donald Trump has said he wants a bigger stimulus package than House Speaker Nancy Pelosi – the surprising twist to the endless has sent stocks higher and the safe-haven dollar lower. Pelosi set Tuesday as a deadline for reaching a deal, perhaps making some think that a deal can be reached quickly. 

Are these hopes real? Probably not. So far, Democrats have passed a bill worth $2.2 trillion while the White House offered only $1.8 trillion. Moreover, Senate Republicans are focused on the Supreme Court and seem to have returned to their opposition to a generous relief package, settling for a sub $1 trillion deal.

With Trump trailing in the polls, lawmakers from his party may prefer sticking to ideology rather than sticking with a loser. FiveThirtyEight's model is pointing to an 87% chance of Joe Biden replacing Trump, while the battle for Senate is closer.

Source: FiveThirtyEight

Also, the elections are only 16 days away, and it is unlikely that a deal – that markets want dearly – can be reached. Both parties are busy bashing each other. At this point, markets prefer a "blue wave" – a victory for Democrats in the Senate, that would ensure generous aid to the economy. That could mean business-unfriendly regulation down the line, but the focus is currently on the recovery.

While the increase in US coronavirus cases – and especially in Wisconsin, a battleground – could impact the vote, the focus is on Europe. Italy joined France, Spain, and other countries in imposing restrictions to curb the spread of the disease, undermining the economic recovery.

Source: FT

Christine Lagarde, President of the European Central Bank, expressed concerns about a slowdown, and some fear a double-dip recession is coming. As long as infections continue rising, the euro is set to remain under pressure. 

Lagarde and Jerome Powell, Chairman of the Federal Reserve, will speak later in the day, but both are unlikely to rock EUR/USD more than the twin issues of EZ COVID-19 cases and US fiscal stimulus.

EUR/USD Technical Analysis

Euro/dollar is trading under the 50, 100, and 200 Simple Moving Averages on the four-hour chart and suffers from downside momentum. Moreover, the Relative Strength Index is above 30 – outside oversold conditions. 

All in all, bears are in control.

Critical support awaits at 1.1685, which was a slow point last week and also in late September. Further down, the next cushions are only at 1.1625 and 1.1610.

Some resistance is at 1.1720, which was a swing low last week, followed by 1.1745, a high point on Friday. The next levels to watch are 1.1770 and 1.1810. 

More Big move coming in EUR/USD? Fiscal stimulus and coronavirus are the keys