The US dollar collapsed amid news that the US House of Representatives approved the $ 900 billion bailout bill. Soon, this package will be voted in the Senate.
The bill includes funds that will help households and businesses affected by the coronavirus pandemic. In particular, these are the small businesses that are in very bad shape due to the crisis. The House of Representatives also approved government funding worth $ 1.4 trillion, and it will run until the end of September 2021.
If the bill is approved by the Senate, Americans will receive another round of direct payments worth $ 600. Co-payments or unemployment benefits worth $ 300 a week have also been approved, and another $ 300 billion will go to help small businesses. Aside from that, $ 50 billion will be allocated for the distribution of COVID-19 vaccines.
At the time of writing, it was reported that the Senate also passed the bill. Therefore, it is now heading to the White House to wait for US President Donald Trump's signature.
Last night, US Treasury Secretary Steven Mnuchin said that payments to households could begin as early as next week. In his opinion, this is a rather extremely fast way to inject money into the economy, and should provide undoubted support in the coming months.
Amid this news, the euro jumped up in the market, thereby winning back all the positions it lost yesterday. As a result, the EUR / USD pair went back to its earlier price level, so euro bears have to bring the quote below 1.2180 if they want the euro to trade at 1.2130 and 1.2080. But if the quote consolidates above 1.2225, the EUR / USD pair may trade at 1.2275, and then move towards the 23rd figure, which is the key target of the bulls for this week.
GBP: At first, the pound was trading downwards because of the new coronavirus outbreak in the UK, but news emerged that the European Union was considering a new proposal for fishing rights, which led to a sharp strengthening of the pound against the US dollar. UK Prime Minister Boris Johnson also said yesterday that he intends to conclude a trade deal within the next 11 hours.
Over the weekend, both sides made it clear that they could not make further compromises, but on Monday, the UK offered to backtrack on its terms if the EU also accommodated them. According to the latest proposal from the UK, the EU should reduce its fishing in UK waters by about a third, that is, a 60% cut in production. Meanwhile, the proposal from the EU was only a 25% reduction, but such was disagreed by France and Denmark, who said that they could block the agreement if they do not like the terms. The European Commission said they have to discuss the issue first with the heads of European governments that have a large fishing industry before giving a response to the UK's proposal.
Nonetheless, amid this news, the pound jumped up by 200 pips, thereby winning back all the positions it lost on Monday. And since the GBP / USD pair went back to its earlier price level, the bears will have to bring the quote below 1.3350 if they want the pound to trade at 1.3240. Their further targets are 1.2190 and 1.2135. Meanwhile, if the quote returns to 1.3435, the GBP / USD pair will be able to move towards 1.3525.
With regards to the state of the economy, a report was published yesterday which indicated that consumer confidence in the eurozone increased in December, mainly due to the emergence of the COVID-19 vaccines. According to the data published by the European Commission, the index rose to -13.9 points, which leaves hope that the expected contraction of the EU economy this 4th quarter will be limited.
Meanwhile, in the US, the Chicago Fed reported that economic activity in its area decreased in November, coming out at only 0.27 points against a value of 1.01 points in the previous month. Growth has slowed due to the quarantine restrictions implemented because of the second COVID-19 outbreak.