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  • EUR/USD near 1.19 to hit the highest level since Sept. 15. 
  • Biden win, split Congress boosts risk appetite, weighs over US dollar. 
  • Coronavirus resurgence poses a downside risk to EUR. 

EUR/USD extends last week’s losses to hit multi-week highs as investors buy risk and offer the safe-haven US dollar on expectations of more monetary stimulus and less confrontational policies under Democrat Biden’s leadership. 

The pair is currently trading in the green at 1.1893, the highest level since Sept. 15, having rallied by nearly 2% last week. 

Divided US Congress a blessing in disguise

While Biden has won US elections, as noted by Associated Press, the Congress is now split contrary to expectations for a Democratic blue wave or control of both the Senate and the House. 

A split Congress means Biden will have a tough time delivering the much-anticipated massive fiscal stimulus. However, it also means the Federal Reserve may have to boost monetary stimulus. The central bank reiterated its dovish bias last week and expressed willingness to do more if needed. Further, a divided government means low odds of sweeping regulatory changes and tax hikes. 

Lastly, Biden favors a multilateral approach to outgoing President Trump’s unilateral policies and is likely to adopt a less confrontational attitude while dealing with China, the European Union, and other nations. 

As such, investors are buying risk, sending stocks higher, and the safe-haven US dollar lower. The dollar index, which tracks the greenback’s value against majors, has slipped to a 10-week low of 92.16. 

The pair’s upside, however, may stall if the coronavirus numbers continue to rise across Eurozone. Major Eurozone economies like Germany and France have already declared a month-long lockdown and France is reportedly planning to downgrade forecasts for 2021 economic output. The data calendar is light on Monday. The pair, therefore, is at the mercy of the broader market sentiment. 

Technical levels