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EURUSD: buyers take profit

Major currencies rose against the US dollar heading into the weekend. The steepest gain against the US dollar was shown by the Canadian dollar ( 1.45%). A smaller increase was recorded by the Swiss franc ( 1.21%), the Australian dollar ( 1.10%), the euro ( 0.98%), the pound sterling ( 0.87%) and the New Zealand dollar ( 0.53%) ). Only the Japanese yen (-0.27%) landed in the red.

EURUSD: buyers take profit EURUSD-Weekly

On Friday, October 9, the EURUSD pair trended higher. The euro firmed 0.61% against the US dollar to 1.1829. Major currencies drew support from dollar depreciation across the board amid improved market sentiment as US stimulus talks resumed and hope was rekindled that an aid package might finally get the green light.

US stock indices finished higher on the day. The S&P 500 rallied 0.88% to its highest close since early September to 3,477. The Dow Jones Industrial Average and the Nasdaq Composite jumped 0.57% and 1.39%, respectively.

House Speaker Nancy Pelosi said on Twitter that Treasury Secretary Steven Mnuchin told her that US President Donald Trump is interested in rapidly reaching an agreement on a massive stimulus package. This message came in after Pelosi stated she would not support a standalone airline stimulus bill that the US president had pushed for, without guarantees that the White House would consider a larger aid package.

Trump tweeted that the negotiations on a package of fiscal support for the economy are moving forward. Then the Wall Street Journal reported, citing well-informed sources, that the White House is preparing to offer a $1.8 trln fiscal support package for consideration by Congress. Economic adviser Larry Kudlow says Trump has approved an adjusted stimulus package.

Todays macro agenda (GMT 3)

08:45 Switzerland SECO economic forecast

14:00 ECB Lagarde speech

19:00 BoE Bailey speech

Public holidays in US and Canada

EURUSD: buyers take profit EURUSD-121020

Current outlook

On Monday, October 12, trading opened with a decline in the euro. There was no news driving the downturn. Market participants likely opted for profit taking right from the opening after Friday's rally. As a result, the pair dropped to 1.1808. At the time of writing, the single currency was trading at 1.1815. Given that on Friday the price action was on an upward trajectory from the Asian session right through to the close of the day, and also that today is a statutory holiday in the US and Canada, we can expect to see a move against Friday with today’s target at the balance line of 1.1790 or the 45-degree line at 1.1775.

During the European session, UK PM Boris Johnson will unveil new measures to combat the Covid-19 pandemic. The Liverpool City Region will imminently go into the strictest “third tier” of new anti-coronavirus restrictions.  Another event to watch for is today’s speech by ECB head Christine Lagarde. She spoke last week and will deliver several speeches this week as well. This will add volatility to the markets during European trading.

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