EUR/USD to turn down amid doubts about fiscal stimulus accord

EUR/USD has been edging higher after President Trump talked up the chances for a fiscal stimulus deal, saving the pair from critical support at 1.1740, yet risks persist, FXStreet’s Analyst Yohay Elam briefs.

Key quotes

“The safe-haven dollar is under pressure and EUR/USD escaped critical support at 1.1740, but it can break resistance at 1.1780? Pelosi will be speaking with US Treasury Secretary Steven Mnuchin for the umpteenth time later in the day, and there are reasons to doubt a deal is reached.”

“Democrats want a generous $2.2 trillion deal and Republicans aim for a mini-accord focusing on airlines and checks to all Americans – with Trump's signature on them. The gap may be too big and markets may be disappointed. What’s more, Senate Republicans may have reached the conclusion that Trump is about to lose the vote, and may move to stick to their long-forgotten principle of keeping the deficit low and focusing on what matters more – the Supreme Court nomination. Furthermore, Dems have no reason to give ground after Trump's own goal on Tuesday, when he cut off talks with the opposition. They may let him continue struggling.” 

“Elsewhere, US jobless claims marginally estimate with 840,000 applications, while continuing claims beat estimates by dipping below 11 million. The European Central Bank's meeting minutes seemed to consist of more attention to the exchange rate than usual – but repeated known stances. The ECB does not target the value of the euro but watches it carefully.” 

“The 100 and 200 Simple Moving Averages converge at 1.1750, making it a critical support line. Further support awaits at 1.1725, 1.1685, and 1.1625. On the flip side, strong resistance is at 1.1780, which held the pair twice in the past few sessions. It is followed by 1.1810 and 1.830.”