Image © European Central Bank
The EUR/USD exchange rate advanced 0.43% on Monday and is seen at 1.1771 on Tuesday, leading analyst and technical forecaster Richard Perry of Hantec Markets to see some potential for further upside, however he cautions this is a market that is still looking prone to sideways action.
There has been a persistent swing back and forth on changes in risk appetite which has pulled the dollar higher and lower in recent weeks.
The driver has been the constant uncertainty and fluctuating expectation on the fiscal stimulus story out of the US.
The result is that EUR/USD has been unable to hold any real trend for weeks now, whilst momentum indicators are oscillating tightly around neutral levels (RSI has been between 45/56 for three weeks).
With a decisive move higher (USD negative) yesterday, support around 1.1685/1.1695 has held firm and the bulls will now be looking towards a test of the 1.1830 October high once more.
A pullback off the day highs yesterday leaves a nagging doubt and element of caution for the bulls this morning, even as the market has ticked slightly higher initially.
Resistance of yesterday’s high is at 1.1795 and protects 1.1830. It is difficult to take a view on EUR/USD right now.
The 48 hours deadline for the talks between the Democrat leadership and the White House over fiscal stimulus comes to pass today.
Democrat House Speaker Nancy Pelosi said over the weekend that Tuesday was the final point at which the stimulus could be delivered before the Presidential Election, two weeks from today.
Whilst there have been fluctuations on Wall Street indices, it is interesting that currency and commodities markets have all but lost direction now.
According to Pelosi’s camp, they have “continued to narrow their differences” but we have been thrown back on forth on several occasions over recent weeks on this stimulus package.
With the potential to use the failure to deliver on stimulus as a political football in the last run up to the election day, we do not hold out much hope that anything positive will be agreed.
If this is the case, then a jolt to sentiment could be seen in the coming days, before markets settle in for the prospects of a Biden victory to the White House.
Biden holds a 10% lead in the averaged polls, whilst also leading in many of the “swing” states.
As for today’s session, there is a mix of sentiment on markets, with little real direction on USD (downside on AUD came after dovish RBA comments with NZD falling in sympathy).