EUR/USD: the dollar is grasping at straws

Trading 06 Nov 2020 Donner votre avis


On Friday, the US currency rate somewhat stabilized after a sharp drop recorded a day earlier.

The uncertainty surrounding the outcome of the US election keeps investors on their toes, allowing the greenback to stay afloat.

Although the chances of Joe Biden winning are growing, the final result has not yet been announced. Vote counting continues in five key states: Pennsylvania, Georgia, Nevada, Arizona, and North Carolina.

The current head of the White House, Donald Trump, is threatening to sue, trying in every possible way to get a victory in the election.

There is a chance that Republicans will retain control of the Senate, which will make it harder for Democrats to pass the larger fiscal stimulus package they promoted earlier.

Despite all this, US stock indexes continued to rise on Thursday, being one step away from showing the maximum weekly rise since April.

Investors are banking on the fact that Biden will be able to overcome the legal obstacles from the side of Trump to become the next President of the United States. The jump in the stock market is also due to the fact that maintaining Republican control of the Senate guarantees that corporate tax increases will not be raised.

Even if a divided Congress fails to provide stimulus, the Fed still has the resources to act.

On Thursday, the regulator confirmed its "dovish" position and expressed its readiness to do more if necessary.

Federal Reserve Chairman Jerome Powell said that FOMC members had thoroughly discussed options for quantitative easing, adding that they understand how to adjust its parameters if it turns out to be appropriate.

The Fed's penchant for additional stimulus is bad news for the greenback.

Over the week, the US currency fell by 1.5%, which is currently the largest drop in almost four months.

The greenback moved to the lower end of its recent trading range of 92.00–94.00.

According to experts, a fall below the level of 92.50 will create prerequisites for retesting the September low in the area of 91.70. Next, the focus will shift to the psychologically important 90.00 mark.

On Thursday, the EUR/USD pair showed the highest daily growth in the last five months.

"The euro may continue to grow. At the same time, the October peak of 1.1880 is a strong resistance. Although the main currency pair can break through this level, it is unlikely to be able to stay above it. The next resistance is at 1.1915. Support is located at 1.1785. Only a breakdown of 1.1760 will indicate a weakening of the current upward pressure," UOB strategists noted.

The material has been provided by InstaForex Company -


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