EUR/USD bull's playbook unfolding, eyes on stimulus packages
|- EUR/USD somewhat stable in light of unlimited QE from the Fed.
- EUR/USD could face an upside correction should euro-zone nations, specifically Germany, step-up to the plate with sufficient stimulus.
EUR/USD is currently reading at 1.0767 between a range of 1.0635 and 1/0828 in highly fluid circumstances pertaining to the spread of COVID-19 and the desperation from governments and central banks to nip this virus in the bud and stave off an outright global depression.
The Federal Reserve is now throwing everything at financial markets and has just unleashed what is essentially unlimited QE. A panicked Federal Reserve has just announced unlimited QE after already getting through the initial $700bn it had announced just eight days ago. In a statement, the Fed announced the following:
“The Federal Reserve will continue to purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions.”
Fed forced into a tight spot, now down to Congress
What this means is there is nothing more that the central bank can do and it is going to be now up to the US Congress to agree on a stimulus package, picking up the baton from where the Fed is now stuck and make a solution for those most in need, those who have lived month to month, week to week, day by day and are now without a job.
For FX, this means that while the US dollar is harbouring investor's preferred cash deposits, for the sake of liquidity, deflationary pressures are a spanner in the works for the dollar bulls. However, the situation if fluid and markets will only when the dollar demand will stop, when it does.
As for the euro, we are waiting to hear from the Germans as to what stimulus packages are going to be on offer – presumably, the European Central Bank would be relieved that it can avoid further drastic measures and potentially support the euro in its relentless downfall vs the greenback. At least, there is some good news that despite COVID19 cases continue to grow in some countries, Europe has shown a slight improvement as lockdowns have broadened.
EUR/USD levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.