The euro continued to strengthen against the US dollar despite many signals that indicate the overbought status of risky assets in the short-term. The news from the White House yesterday, which hints of a possible stimulus package before the US elections, helped the bulls to continue the upward trend in the EUR/USD pair.
According to White House Chief of Staff Mark Meadows, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin made enough progress to continue negotiations and come to an agreement. Such news, of course, put pressure on the US dollar and returned the appetite of traders for risky assets.
To add to that, ECB President Christine Lagarde came up with a proposal to make a permanent fund for economic response to crises. She said that it would be nice if the current 750 billion fund becomes permanent, as through which it would be possible to provide assistance to European countries that are in crisis.
"We should think about keeping the fund among the tools that the European authorities can use in similar circumstances in the future," Lagarde said.
With regards to the EUR / USD pair, going beyond the resistance level of 1.1870 will open a chance for a breakdown of the 19th figure, as well as for renewing highs around 1.1920 and 1.1970. However, it should be noted that the current bullish trend could turn into bearish later this week, so it is best to be careful and only open long positions after a downward correction. The acceptable levels for this are 1.1800 and 1.1770.
As for economic statistics, a rather disappointing figure was reported on the US housing market. According to the report of the US Department of Commerce, housing starts rose only 1.9% this September and to 1.415 million homes per year, well below the economists' forecast which is an increase of 3.8% to 1.47 million. To add to that, the data is below the pre-crisis level reached in February 2020.
Fed representatives also delivered speeches yesterday, and they were mainly about the growth of the US economy. For example, Chicago Fed president, Charles Evans, said the recovery is clearly uneven, but it will most likely continue, even in 2021, where the unemployment rate could fall to 5.5%. As for inflation, Evans said that problems could arise, but further fiscal policy of the US government will definitely improve the outlook.