EUR/USD to test new highs as optimism prevails

EUR/USD has been rising amid a mix of monetary and fiscal stimulus from the US and could challenge new highs thanks to the predominate optimism in the markets, Yohay Elam, an analyst at FXStreet, informs.

Key quotes

“The Fed seems to have made good on its promise to act aggressively and proactively – announcing corporate bond-buying and sending stocks higher. The announcement changed the market mood and downed the dollar, allowing EUR/USD to recapture 1.13 and more.”

“President Donald Trump added to market optimism. The White House is reportedly considering a $1 trillion infrastructure plan. The move makes sense ahead of the presidential elections, yet previous pledges to rebuild roads ended without action. Markets remain optimistic for now.” 

“Investors may find encouragement in signs of a rapprochement between China and the US. Washington will allow US firms to use some of Huwaei's equipment. More importantly, Secretary of State Mike Pompeo may meet his Chinese counterpart Yang Jiechi in Hawaii. Reporting on the potential encounter are scant, amid the sensitivity of relations.”

“In the old continent, the German ZEW Economic Sentiment figures are forecast to reflect growing optimism. Berlin recently announced a large stimulus package worth €130 billion, the ECB increased its bond-buying scheme – and coronavirus seems under control.”