EUR/USD: EU deal to fuel the upward march

There are solid reasons why the EU deal, which includes a €750 billion recovery fund, should provide support for the euro. The EUR/USD pair is holding onto the high levels of the year, eying the 2020 peak of 1.1495, FXStreet’s analyst Yohay Elam reports.

Key quotes

“The €750 billion scheme includes €390 billion in grants – down from €500 billion originally suggested. Nevertheless, the majority of the money comes in the form of funds that governments can spend freely and according to their needs – unconditional on reforms overseen by the ‘troika’.” 

“In addition to agreeing on the recovery fund, exhausted leaders also agreed on a seven-year budget running from 2021 to 2027. While that €1.074 trillion expenditure plan will still undergo scrutiny by the European Parliament, it is another matter that is mostly settled.”

“With Europe getting its fiscal act together, the common currency has room to run – and it also shifts the focus to US government support. Federal unemployment payments expire in the next few days and other extraordinary plans run out later on. Will Congress follow Brussels in providing more support? EUR/USD may remain bid in any case.”