Market participants sold the US currency as stimulus talks showed only slight progress in the US. Over the weekend, House Speaker Nancy Pelosi set a 48-hour deadline for an accord to be reached on the remaining unresolved issues.
US Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi accelerated negotiations on Tuesday. According to Pelosi, a new stimulus deal could be wrapped up by the end of the week. There were also reports that Senate Republicans are preparing a vote on a new stimulus package.
Today’s macro agenda (GMT 3)
10:30 EU: ECB Lagarde speech
15:30 Canada: CPI (September) and retail sales (August)
15:50 Fed Brainard speech
16:55 EU: ECB Lane speech
17:30 US: EIA weekly petroleum status report
21:00 US: Beige book
EURUSD growth decelerated around 1.1850. In today’s Asian trading, the price action continued to move resolutely higher, with an intraday high of 1.1863.
Euro buyers are shrugging off the upsurge in coronavirus cases and the re-imposition of lockdown measures across the EU. In total, some 40.8 mln people have been diagnosed with the coronavirus worldwide. Market participants are currently focused on the bipartisan talks aimed at passing a new economic relief bill. And while Nancy Pelosi expects the talks to lead to an agreement by the end of this week, FX players would be well advised to prepare for the talks to fail.
Given that the euro strengthened from 1.1689 to 1.1863 ( 174 pps), we have reason to believe that gains in the key pair will slow down. Most likely, the euro will enter a consolidation phase or rise at a slower pace, while gold and the pound can be expected to narrow yesterday's gap.
Right now, there are a couple of resistance levels: 1.1880 and 1.1885. Notably, the MA line (1% deviation from the 55-day MA balance line), points to room for upside. Looking at the daily TF, after 1.1885 the road opens for buyers to 1.1940/50. Buyers will likely attempt a breakout to 1.1885.
Today’s macro agenda is nearly empty. FX players, however, should watch for Christine Lagarde’s speech as she could voice dissatisfaction at the strengthening euro.