Markets are hot and cold amid conflicting news from Washington. This trend is likely to continue until the US presidential election on November 3.

US President Donald Trump broke off talks with Democrats on a new economic stimulus package on Tuesday, rejecting their budget proposal of $ 2.2 trillion. However, Trump later said he was ready to sign relatively smaller support packages.

Against the background of Trump's softening position, US stock indices rose noticeably at the end of trading on Wednesday, closing at the highest levels since early September.

"It seems that concerns about fiscal stimulus in the US have eased somewhat. It is possible that we will not get fiscal stimulus before the election, but if the polls are true and we see a democratic leader win, we will most likely get fiscal stimulus at the end of this year or early next year," said strategists at Bank of Singapore.

At the same time, experts doubt that the House of Representatives will approve direct payments in isolation from the comprehensive agreement, and the US economy will be able to avoid a slowdown this year in the absence of another package of financial assistance.

"Markets will breathe a sigh of relief when American politicians agree on a new package of assistance to the national economy. However, in anticipation of this event, investors may have to see that the pace of recovery in the US labor market is slowing down as winter approaches and increasing pressure on household incomes," Rabobank experts said.

They expect the major currency pair to trade close to 1.1700 in a month outlook as market participants may start shorting the dollar amid volatility leading up to the US presidential election.

The EUR / USD pair faced strong resistance at 1.1780 -1.1810.

Political uncertainty in the US supports a safe greenback, while a worsening epidemiological situation in the EU puts pressure on the euro. France and Spain are setting new anti-records of COVID-19 cases. Germany starts to record over 4,000 COVID-19 cases every day, the highest since April. Berlin, following Paris and Madrid, has already introduced restrictions.

According to the current head of the ECB, Christine Lagarde, the second wave of the coronavirus pandemic could lead to a slowdown in the recovery of the Eurozone economy.

"The EUR / USD pair has not yet been able to break through the 55-day moving average, which is now near 1.1792. As long as the pair is trading below this level, there is a chance that the correction will continue. Support is located at 1.1724, 1.1720, 1.1695, and 1.1685. A breakdown of the last mark will aim the pair at the recent low in the 1.1612 region and further at 1.1485-1.1495. On the contrary, a close above 1.1791-1.1792 will target the pair at 1.1808-1.1812 and 1.1873-1.1883," said experts at Credit Suisse.