EUR/USD: Fiscal stimulus is the main theme while COVID-19 cases lurk in the background

EUR/USD has been advancing as US stimulus talks remain alive. Investors are shrugging off Republican reluctance for a deal and surging eurozone cases,  |  21/10/2020 09:48

EUR/USD has been advancing as US stimulus talks remain alive. Investors are shrugging off Republican reluctance for a deal and surging eurozone cases, Yohay Elam, an Analyst at FXStreet, reports.

See: EUR/USD to march forward to 1.20 in December – Danske Bank

Key quotes

“The deadline is dead and talks are still alive – the ongoing talks in Washington and the positive commentary are boosting stocks and weighing on the safe-haven dollar. While both sides say that differences remain, the prospects of seeing a multi-trillion deal agreed before the elections are inspiring markets.”

“News about talks is set to rock markets and overshadow the elections. Can President Donald Trump win reelection? Tuesday was a relatively upbeat day for the current occupant of the White House, but he continues trailing rival Joe Biden ahead of the pair's televised debate late on Thursday.”

“Investors seem to be dismissing the increase in COVID-19 cases in Europe. National, regional, and local governments continue curbing activity and results may take more time. In the meantime, the prospects for a double-dip recession remain elevated.”

“Christine Lagarde, President of the European Central Bank, has spoken again on Wednesday, reiterating that her institution strives to price stability and wants to refrain from deflation. Is the ECB considering a new stimulus? Lagarde seems to be pushing in that direction, but she would need support from the hawks. The bank delivers its decision next week.”

 

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