The Euro continued rallying along with other currencies

The Euro hit its strongest point since early March on Tuesday after rallying on Monday. European Union countries struck a new deal for a massive stimulus plan to boost their coronavirus-hit economies. Such an upturn in sentiment sent the Australian dollar to a one-year high as well.

Encouraging results from several COVID-19 vaccine trials also bolstered market sentiment. As a result, currencies topped recent highs against the safe-haven U.S. dollar.

The Euro jumped by 0.2% to $1.1470 in Asian trading, its strongest since March 9. However, the gains were tempered by prior market expectations that a deal would eventually be agreed upon. The common currency traded higher by 0.1% at $1.1454 at last notice.

Commerzbank analyst Esther Reichelt stated that, for the time being, traders couldn’t expect further momentum for the euro from either the fiscal or monetary policy side.

According to analysts, there was little new information in the final deal to push the euro much higher immediately as the breakdown between grants and loans was already known.

It is primarily the recovery of the real economy and the development of Covid-19 infections that will determine how the euro will perform going forward – noted Reichelt. According to her, $1.14 was a justified price for the currency.

How did the U.S. dollar fare?

The dollar was flat on Tuesday when measured against a basket of currencies, trading at last at 95.675.

ING analysts stated that they are looking for more gains, to $1.20 later this year, as USD weakness kicks in. The recovery fund agreement is significant enough not to prompt investors to exit their long EUR positions, particularly against the greenback, where the outlook for the remainder of the year looks bleak.

Meanwhile, the Australian dollar soared by 0.8% to $0.7071, its highest since July 2019. The bullish mood helped its rally.

The Canadian dollar also surged forward, with the U.S. dollar lower by 0.4% to C$1.3484. The Norwegian crown skyrocketed, with the Euro falling by 0.5% against the crown to 10.51 crowns.

On the other hand, the sterling gained 0.4% to $1.2716, its highest since June 11, and 0.3% against the euro to 90.20 pence. The yen changed slightly, at 107.22 per dollar.