Stimulus talk undermines greenback again

By Peter Bukov|

Published: November 20 2020, 09:01 GMT+0

Stimulus talk undermines greenback again


The USD was trading somewhat lower on Friday, while stocks rose on Thursday and continued to be bid today. 

Late on Thursday, news broke out that Republican Majority Leader Mitch McConnell had agreed to revive talks to craft a new fiscal relief package. That was a bullish impetus for stocks and a bearish message for the greenback as we had no news regarding the stimulus since the elections two weeks ago.

Additionally, in an interview yesterday, the ECB’s Lagarde said the ECB is planning another massive stimulus package in December, but her words failed to inspire investors to buy more equities. 

Later in the day, Canadian retail sales are due, most likely moving the Canadian dollar. 

The greenback reversed its gains yesterday and ended weaker, which might suggest further selling is likely in the near-term. The dollar index remains stuck at key long-term support, and if it breaks below it, we could see the EURUSD pair rally toward 1.25.

Gold managed to defend the 1.850 USD support again, and now it looks like a perfect double/triple bottom pattern, which might send the metal flying. The next target seems to be near 1,900 USD.