$1.9 Trillion COVID-19 Stimulus Bill Passes Senate

Once again it’s Monday and the forex is off and running. Over the weekend, the U.S. Senate approved Joe Biden’s $1.9 trillion COVID-19 relief package. Political pundits now expect the legislation to be signed into law by Friday or Saturday of this week. Unexpectedly, the Greenback is enjoying the news. Action in the EUR/USD (-0.43%), USD/CHF (+0.57%), and USD/JPY (+0.50%) have all gone in favor of the dollar. 

This morning’s U.S. economic calendar was relatively vacant. However, the action in U.S. Treasuries and stimulus passage are both driving participation to the markets. Here’s a quick look at each issue:

• U.S. 10-Year Notes: Historically, the U.S. 10-year Note is trading very near all-time lows. However, yields are up again today, hitting 1.605%. The bullish action suggests that intermediate and long-term borrowing rates are headed higher. Also, it tells us that institutional capital is becoming wary of broader market risk. If this trend continues, Wall Street sentiment is due for a major shift in the coming months. 

• COVID-19 Stimulus: The Senate passed Biden’s massive COVID-19 stimulus package over the weekend. Now, the bill goes in front of the House of Reps for a final vote later this evening. Although not unexpected, the stimulus capital will begin hitting the economy next week. 

Already, March has been a big month for the USD. Given the uptick in U.S. Treasuries and passage of stimulus, it is a bit of a mystery as why. Could it be that the Fed is getting ready for a surprise policy shift? Unlikely. However, we will find out more in next week’s FOMC meeting. As always, stay tuned.

Senate Passes Stimulus, EUR/USD Plunges

For the third straight week, the EUR/USD is in a bearish position. If the losses continue, a buying opportunity may set up in the near future.

Here are a few levels to watch in the EUR/USD:

• Resistance(1): Bollinger MP, 1.1991
• Support(1): 78% Fibonacci Retracement, 1.1766

Bottom Line: Until elected, I’ll have buy orders in the queue from 1.1779. With an initial stop loss at 1.1679, this short-term position trade produces 100 pips on a standard 1:1 risk vs reward management plan. Barring a surprise House rebuke of the Senate’s stimulus approval, this trade is likely to set up ahead of the weekend.