EUR/USD Extends Big Weekly Gains
The Greenback is posting another bearish session, led by a spike in the EUR/USD. As we roll toward the weekend break, USD losses vs the euro, British pound, and Swiss franc have headlined the forex Friday. With another US$1 trillion stimulus package being negotiated on Capitol Hill, dollar devaluation is becoming a recurring theme.
Right now, it’s all about stimulus, COVID-19, and U.S./China tensions. Below is a quick look at the latest in each market driver:
- U.S. COVID-19 infections continue to rise, led by Arizona, Florida, and Texas. Dr. Anthony Fauci took to airwaves commenting that he “would not get on a plane or eat inside a restaurant.” As he has all year long, Fauci has once again raised public angst over the spread of COVID-19.
- U.S./China tensions continue to escalate following closure of China’s Houston, Texas consulate. In retaliation, China has ordered the U.S. consulate in Chengdu to cease operations. As of now, one has to wonder how long last January’s “Phase One” trade deal will be honored.
- On the stimulus front, Republican leadership has unveiled a new US$1 trillion public COVID-19 bailout package. The plan is up for Congressional debate and is expected to be passed in the coming weeks.
All in all, none of the news is helping the USD. Forex players have extended their bearish Greenback bets, as evidenced by the breakout rally in the EUR/USD.
EUR/USD Closes In On 1.1700
The EUR/USD is on a tear higher, reaching levels not seen since 2018. Bidders are stepping in above every big-round-number, driving the bullish break. Now, the next barriers up for scrutiny are 1.1650 and 1.1700.
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Bottom Line: While next week’s FED meeting may slow bids toward the EUR/USD, right now it’s all systems go. If the current sentiment continues, a test of 1.1700 is likely to come sooner rather than later.
Until elected, I’ll have sell orders in the queue from 1.1694. With an initial stop at 1.1709, this trade produces 30 pips on a short-term rejection of 1.1700.
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