The dollar index stayed flat at 95.95 on Monday. Investors’ strong risk appetite kept its advance in check as the expectations of more stimulus from Europe and the United States strengthened sentiment. Democrats and Republicans pushed for their own agenda over the last week as they argued in the U.S. Congress over a new coronavirus-aid bill.
Meanwhile, the British pound was steady at $1.2572. But it lowered by 0.1% versus the Euro at 91.05 pence on Monday. The Euro rallied to a 19-week high of $1.1467, but it declined slightly afterward.
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.
The common currency was higher by 0.2% at $1.1446 at the end of yesterday’s session. However, it looked like it was struggling for a while to hold above that $1.1460 level before that time.
What caused the Euro’s last rally?
EU leaders have made progress in Brussels after three days of discussions. So far, they still remain at odds over how to divide the proposed 750 billion euros recovery fund, which is designed to help Europe cope with the recession.
Even though the EU summit was due for the last two days, the meeting is continuing on the fourth day of negotiations. It seems EU leaders are ready to do everything it takes to maintain unity in the eurozone.
According to Jane Foley, the senior currency strategist at Rabobank, the fact that the euro could not stabilize above $1.1460 signaled more was needed to push it above this resistance level.
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 a couple of positive headlines to take us to the next step – added the strategist. Still, she thinks that the fundamentals for the Euro have improved since around about May.