Possible Introduction of Stimulus Bill Punishes USD But Fuels EUR

WikiFX News (20 Oct.) - Headlines are stating that the US may introduce a coronavirus stimulus plan in recent days, which significantly lift risk-on tilts, spurring a USD selling, a EUR rise, and a EUR/USD close to 1.1800.

House Speaker Pelosi set Tuesday the deadline for Democrats and the White House to reach an agreement if they want to get it done before the election. If no agreement can be struck by then, it is difficult for Congress to pass legislation before Election Day, considering the legislative process in both Houses.

Previously, the greenback has embraced a growth at the expense of the euro due to the risk aversion arose from the stalled stimulus negotiations, the COVID-19 pandemic, and the deadlocked Brexit talks. Investors should keep an eye on the progress of the stimulus bill because the news of approval will rekindle the risk sentiment, inspiring further selling in the dollar and a sharp rise in the euro.

Once EUR/USD stands above 1.1800 with the upside hurdle clustered at 1.1900, investors may tend to go long.

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Chart: Trend of EUR/USD