Investors are now increasingly confident that the Fed will expand its stimulus program to protect the economy amid the pandemic at its December 15-16 meeting.
Jerome Powell and US Treasury Secretary Stephen Mnuchin also reminded congressmen in their speeches on Tuesday about the problem of fiscal support for the economy hit by the pandemic. Powell said there is still a lot of work to be done to recover, and "some fiscal support would really help the economy".
Stephen Mnuchin and Jerome Powell on Tuesday expressed support for a new joint Democratic-Republican proposal for $ 908 billion in support of the economy. "It is clear that many sectors will benefit from this package", Powell said at a Senate Banking Committee hearing, and Mnuchin confirmed that he "intends to examine the package as a whole". “I believe further fiscal stimulus is needed”, he added.
Thus, if other major world central banks also do not take active stimulus measures, in turn, lowering interest rates and expanding quantitative easing programs, then further weakening of the dollar should be expected.
According to many economists, the dollar is still significantly overvalued, and in 2021 it will weaken by another 10% - 20%.
Positive news regarding coronavirus vaccines also contributes to the decline in demand for the dollar as a defensive asset. Thus, the UK Medicines and Healthcare Products Administration has confirmed the efficacy and safety of a vaccine jointly developed by BioNTech SE and Pfizer Inc. The vaccine will now be available in the UK next week.
EUR / USD reached a new 32-month high during today's Asian session near the 1.2087 mark. Its strong positive momentum remains. It is possible that before the ECB meeting scheduled for December 10, EUR / USD may reach the next resistance levels 1.2100, 1.2180 (see "Technical Analysis and Trading Recommendations").
*) for trading, I choose THIS BROKER and use VPS (to get a bonus, enter the promo code - zomro_17601)
**) my signals
