The Euro rallied as EU discussed new Covid-19 recovery fund

The Euro pulled back after surging forward to a 19-week high of $1.1467 on Monday. EU summit chairman, Charles Michel, stated that a recovery fund to revive economies hit by the coronavirus pandemic could contain 390 billion euros in grants. This news caused the Euro’s rally.

After three days of discussions, EU leaders have made progress in Brussels. However, they remain at odds over how to divide the proposed 750 billion euros ($858.98 billion) recovery fund, designed to help Europe cope with its deepest recession since World War Two.

The fact that the currency could not stabilize above $1.1460 signaled more was needed to push it above this resistance level – stated Jane Foley, senior currency strategist at Rabobank.

The euro was trading higher by 0.2% at $1.1446 at last notice. Foley noted that there was some good news already in the price. However, it looked like it was struggling this morning to hold above the $1.1460 level.

Still, she thinks that the fundamentals for the euro have improved since around about May. Traders have seen the EU politicians push forward. They’ve seen the European Central Bank also try and oppress fears of fragmentations. They may still need another couple of positive headlines to take us to the next step – added the strategist.

Initially, the EU summit was due for the last two days, but the meeting is continuing on the fourth day of negotiations. That is evidence that EU leaders are ready to do everything it takes to maintain unity in the eurozone.

How did the U.S. dollar fare?

The dollar index was flat at 95.95 on Monday. Its advance was kept in check by investors’ strong risk appetite on the back of expectations of more stimulus from Europe and the United States as well.

Republicans and Democrats pushed for their own agenda during the last week when they argued in the U.S. Congress over a new coronavirus-aid bill. Meanwhile, the British pound traded steady at $1.2572 and 0.1% lower versus the Euro at 91.05 pence.