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EUR/USD has been on the rise amid optimism about stimulus and President Trump’s recovery. Politics and the virus are set to have a growing impact on the pair in the upcoming week, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“Rising COVID-19 infections could result in new limitations in additional countries and cities. So far, the news has hamstrung the euro but did not trigger a downfall. If the uptrend in cases extends, the common currency could struggle. Conversely, if the measures taken in several capitals bear fruit, it could provide relief for the euro.

“The German ZEW Economic Indicator is set to edge lower in October after surprising the upside in September. Investors reported struggles at present but were optimistic about the recovery. If the increase in coronavirus cases pushes sentiment lower, it could drag the common currency down with it.”

“It is all about fiscal stimulus – the bigger the package and the sooner it arrives, the more stocks could rise, and the dollar could fall. If Democrats and Republicans get closer and eventually strike a deal, it would boost EUR/USD. On the other hand, a blame game between the parties would weigh on the currency pair.” 

“Retail sales data for September is set to rock markets.” After disappointing figures in August, modest increases are on the cards for the previous month. Consumption is the vast majority of the US economy, making it a market mover. Moreover, it could shake up fiscal stimulus talks. After August’s drop in the Control Group, Republicans raised their offer. Will bad news turn into good news once again? Investors are set to quickly forget weak data if the result is more government money.”