EUR/USD Forecast: Are bulls taking over? Trump holds the key on stimulus deadline day

There is nothing like a deadline to sharpen minds – and there is a growing chance for a large fiscal stimulus package in the US. Stcoks are attempting recovery and the safe-haven dollar is on the back foot, allowing EUR/USD to rise. 

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have expressed optimism and have noted that the gap is "narrowing" after holding a long call on Monday. Democrats wanted a bill worth around $2.2 trillion while the White House's offer came short of the $2 trillion mark.

Pelosi set to Tuesday as the deadline to reach a deal – talks have been dragging on for months and the elections are due in exactly two weeks. Will white smoke come out of Capitol Hill?

President Donald Trump has been eager to reach a deal lately, but opposition within his own party. Senate Majority Leader Mitch McConnel is set to push through a sub $1 trillion bill through the upper chamber. Chuck Schumer, his Democratic counterpart also retorted that current GOP offers are "unacceptable." 

Will Trump push for a deal and can he impose his will? That remains an open question. Markets are set to seize on any hint if an agreement is coming or not. 

Opinion polls are little moved ahead of the elections, with Trump trailing rival Joe Biden by 8.9% according to RealClearPolitics, while models by The Economist and FiveThirtyEight are averaging a 90% chance for a change at the top. The Senate race – which is critical for passing new relief packages – remains close, with around 74% according to the models. 

Source: FiveThirtyEight

See 2020 Elections: Seven reasons why this is not 2016, time to focus on the Senate

Few surveys are likely to come out ahead of the second and last presidential debate late on Thursday. The commission responsible for the encounters announced that the candidates will receive two minutes of uninterrupted time in every segment – muting their rival's microphone. 

The top topic in the elections is a coronavirus, which is spreading in the US and more rapidly in Europe. Ireland and Wales announced new restrictions, while Belgian officials fear a "tsunami" of infections. 

Source: FT

Christine Lagarde, President of the European Central Bank, raised concerns of a slowdown stemming from this second wave. The ECB announces its decision next week, and for now, no new measures are anticipated. However, additional COVID-19 statistics and lockdown news may push the Frankfurt-based institution to action. 

John Williams, President of the New York branch of the Federal Reserve, will speak later in the day. Williams is considered No. 3 at the bank, but he is unlikely to rock the boat ahead of the elections. Building Permits and Housing Starts figures for September are also due out on Tuesday. 

Overall, the focus is on fiscal stimulus, but coronavirus concerns could take over at some point.

EUR/USD Technical Analysis

Euro/dollar has managed to rise above the 50, 100, and 200 Simple Moving Averages on the four-hour chart ~ a bullish development. Momentum has also turned positive while the Relative Strength Index is below 70, outside overbought conditions.

All in all, bulls are in control.

Resistance awaits at 1.1795, Monday's peak, followed by 1.1830, which is October's top. The next line to watch is 1.1870.

Support is at 1.1720, which is a swing low last week, followed by 1.1685, a double-bottom. Further below, 1.1625 awaits EUR/USD. 

More Big move coming in EUR/USD? Fiscal stimulus and coronavirus are the keys