US and German equities rally after Trump signs stimulus bill

US equities rallied today as the market reacted to the decision by Donald Trump to sign the $900 billion stimulus package passed last week. The president had insisted that Congress should add the total payouts to individuals to a record $2,000. That would have been an increase from the $600 in the bill. The bill will have money for states, airlines, and other small and medium-sized companies. By signing the bill, the president also averted a disruptive government shutdown. The focus will now shift to additional stimulus packages that have been proposed by Democrats. The stimulus is often viewed as a positive thing for companies because it will increase spending.

German stocks rallied today in part because of the new stimulus in the United States. They also rallied in reaction to the Brexit deal that was reached between the European Union and the United Kingdom. The deal was important for DAX constituents because of the vast supply chain relations between Germany and the UK. For example, automakers like Daimler, Volkswagen, and BMW source thousands of parts from the UK. The DAX also rose after Delivery Hero’s $4 billion acquisition of Woowa, the leading food delivery company in South Korea. The deal will push the company to the world’s third-largest food delivery market.

The US dollar index declined today in part because of the falling global risks. For one, in Europe, negotiators reached a Brexit deal that will ensure a smooth divorce later this week. Also, EU members agreed to the seven-year budget deal that faced resistance from countries like Hungary and Poland. Further, while the number of Covid cases is expected to keep rising, countries are continuing the vaccination process. Earlier today, the UK became the first country to approve the vaccine made by AstraZeneca. This vaccine is cheaper than that of Pfizer and Moderna. It is also easier to transport and store because it can be stored in a normal refrigerator.

GER30

The GER30 climbed to an all-time high of €13,830 after the US stimulus package. On the four-hour chart, the index is trading above the envelopes indicator and the dots of the Parabolic SAR. The index also rose above the 50-day and 100-day exponential moving averages. The Relative Strength Index (RSI) and the Stochastic oscillator also moved above the overbought level. Therefore, the index will likely continue rising as bulls aim for the next resistance at €14,000.

EUR/USD

The EUR/USD pair rose to an intraday high of 1.2250 and then pulled-back to the current level of 1.2210. On the hourly chart, this price is between the 15-day and 25-day exponential moving averages. This price is also slightly above the yellow ascending trendline. Meanwhile, the signal and histogram of the MACD has remained above the neutral level. Therefore, the pair is likely to remain in the current range during the American session.

XAU/USD

The XAU/USD pair rose to an intraday high of 1,900 after Trump signed the stimulus deal. It then pared back those gains and is currently trading at 1,878. On the four-hour chart, the price has moved slightly below the 61.8% Fibonacci retracement level. It is being supported by the rising trendline. It is in the fifth wave of the Elliot Wave pattern. Therefore, the pair may bounce back as bulls aim for the next resistance at 1,900.