U.S. fiscal stimulus | 21 January 2021

21 January 2021, EUR/USD

U.S. fiscal stimulus

EURUSD trading plan:

The risk sentiment on the rise after comments Janet Yellen, Joe Biden's nominee for Treasury Secretary, pointed towards substantial additional fiscal spending t reflate the U.S. economy. The former Federal Reserve head urged Congress to “act big” on Covid-19 relief. Opposition to the plan from Republican lawmakers over its cost given the already sizable budget deficit, but Yellen stated that its benefits will far exceed the costs over the long term. Further fiscal stimulus, along with a non-reactive Federal Reserve, should make front-end U.S. real rates even more negative and naturally weigh on the dollar.

Investment idea: Buy 1.2103 and take profit 1.2165.

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David Johnson
Analyst of «FreshForex» company
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