EUR/USD is set to test 1.15-1.20 range resistance as US election risk ease. The European Central Bank (ECB) assuring more PEPP and funding support should reduce regional lockdown fiscal blow out risks, according to economists at Westpac.
Key quotes
“In the October meeting, ECB has prepared markets for increases in their PEPP and potential for increased APP envelope as well as potential further funding facilities and more attractive terms for TLTRO III facilities. There have also been discussions around temporarily extending the less stringent restrictions on PEPP operations to other facilities to allow for broader bond purchases especially to more debt-burdened member nations until the EC Recovery Fund is fully operational.”
“The broad implementation of tighter restrictions and lockdowns across the eurozone is forcing further and broader support schemes on a national basis which will see further blowouts of fiscal deficits.”
“A risk positive outcome to the tight US election and confirmation of EC Recovery Fund implementation should see EUR/USD test resistance within its recent 1.15-1.20 range.”
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