- Euro gains edge against the dollar after the EU revealed an economic recovery fund plan.
- U.S dollar neutral as investors wait to hear Trump’s response to China’s new security law for Hong Kong.
- Econmic sentiments favor Euro as companies resume activities across Europe.
The EUR/USD currency pair kicked off Friday’s trading session on strong bullish momentum in line with the bull run that has prevailed for the entire week. It mainly owes that momentum to the Euro’s rally following the European Union’s recent announcement that it will launch a European recovery fund. The EU also unveiled fiscal stimulus measures that include loans and grants to be provided to Eurozone countries.
The positive Eurozone announcements encouraged investors to side with the Euro and thus the rally. On the technical side of things. The exchange rate is expected to test key price points at 1.1098, 1.1141, and 1.1165 if it trades long above 1.1078. The EUR/USD’s outlook for the day remains bullish.
The EUR/USD enjoyed a significant boost to its rally this week after the EU revealed the plan to launch the European recovery fund on Wednesday. The plan was unexpected, but a pleasant surprise to investors because it highlights the EU’s plans to facilitate economic recovery in the region. It will include loans worth 250 billion euros, adding to the grants worth 500 billion euros proposed by Germany and France a week ago.
The move promoted improved sentiments among investors and thus more appetite for the Euro, leading to the strong rally. The announcement was also timely because it came at around the same time that European companies had just started to resume their operations thanks to eased COVID-19 restrictions.
The greenback’s performance remained relatively muted. This is because investors have been holding off trades to see how the U.S president Donald Trump would react to the new security law that China passed for Hong Kong. Many believe that the law will take away from Hong Kong’s freedoms and autonomy.