The EUR / USD pair is trading in the green on Tuesday amid the continuing weakening of the dollar. In the coming days, investors will focus on news about the second round of voting for the Senate elections in Georgia.
Goldman Sachs analysts say the dollar is now priced at roughly a 50% chance that Democrats will win both Senate seats from Georgia. In this case, Democrats will gain control of the Senate and will be able to implement further measures of fiscal stimulus. In case of an increase in stimulating measures, the dollar will inevitably decline, therefore, at this stage, sales of the US dollar against other major currencies still prevail in the market.
On Wednesday, the minutes of the last FOMC meeting will also be published, which will probably indicate the Fed's inclination to continue soft monetary policy, which may increase pressure on the US currency. On the eve of the President of the Federal Reserve Bank of Cleveland Loretta Mester said that the US economy will need support from the Fed for a long time. Mester also noted the continuing high uncertainty about the prospects for economic development.
In the US economic calendar today, it is worth paying attention to the publication of data on the manufacturing sector PMI for December from ISM. The indicator is expected to decrease from 57.5 to 56.6 points.
In the economic calendar of the EU, the central news of the day will be the publication of the report on the German labor market for December. Weaker data is predicted compared to the November report due to increased quarantine measures.
On Monday, the currency pair again failed to break through the resistance at 1.2300. Nevertheless, buyers kept the price above 1.2250, so today we are waiting for another attempt to storm 1.2300.
The main scenario is an increase to 1.2310 from the current levels.
An alternative scenario is a breakdown of the support at 1.2250 and a decline to 1.2160.
The current fundamental outlook is moderately positive. We consider longs from the level of 1.2250.
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