$900 Billion Stimulus Package Passes Congress

It’s been a big day on Wall Street, with Congress finally passing COVID-19 stimulus bill number two. At the halfway point of the U.S. trading session, the DJIA DOW (+220), S&P 500 SPX (+30), and NASDAQ (+95) are all moving higher. For the time being, the sentiment is positive as Congress has passed a $900 billion relief package.

Over the weekend, Republican and Democratic leadership took strong postures regarding personal relief payments. At the end of the day, here’s what lawmakers came up with:

• $600 direct payments to certain taxpayers
• $300 per week boost in unemployment benefits for at least 10 weeks
• Extended food stamp benefits
• Additional funds for the paycheck protection program (PPP) and disaster relief loans

As a general rule, stimulus isn’t great news for the USD. However, today is bucking conventional wisdom. The greenback is driving higher against the JPY and GBP, while lagging against the euro. To address the situation, let’s take a look at the EUR/USD and see where rates currently stand.

EUR/USD Strong Amid Congress Stimulus Package Number Two

It turns out that all of the tough talk from the deal makers in Congress had little merit. Threats from President Trump to veto the bill if payments weren’t raised from $600 to $2000 for individuals were largely abandoned. At this point, it looks like today’s bill is only a preview of things to come in 2021.

As the week progresses, here are two levels worth watching:

• Resistance(1): Spike High, 1.2272
• Support(1): 38% Current Wave, 1.2092

Overview: As the Congressional and trading years wind down, there may be some fireworks in store for the EUR/USD. A three-week compression pattern has set up, suggesting that a directional move is likely. Unless we see rates pullback beneath the 38% retracement, a bullish bias remains warranted for this pair.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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