- EUR/USD traded near recent highs yesterday.
- The US stimulus developments watched keenly for directions.
Global risk sentiments are in check today as a result of the slow progress in the US stimulus discussions. EUR/USD bulls took a breather today, along with the equities, after continuously gaining in the earlier four sessions. The pair had touched a five-week high on Wednesday around the 1.1880 area.
The US dollar weakness primarily drove the gain in the pair as the market participants sought pro-risk assets at the cost of the greenback. Trump’s willingness to consider a more considerable aid had raised the chances of getting a stimulus for the economy before the November elections.
The US Treasury witnessed a selloff as the increased government borrowing reduced the appeal of the sovereign bonds. The yield in the US 10-year Treasury scaled a four-month high, resulting in additional selling in the USD. The greenback appeal didn’t return even with the global economic worries – as a second wave of the pandemic hit many countries.
The US stimulus package might not have a smooth sail through the Republican majority senate as Trump’s suggestion of a higher stimulus met with strong opposition from his party. Also, his accusation against the Democrats of not being ready to craft an acceptable stimulus bill can play spoilsport in the discussions.
The lack of clarity of the bill along with the dovish ECB pushed the EUR/USD down during the Asian session today. Traders now eye German Gfk Consumer Confidence for an immediate direction in the pair and, later in the day, the US Initial Weekly Jobless Claims will set the trading tone. Nevertheless, the developments regarding the stimulus will have a significant influence in the pair’s trading ahead.