The EURUSD pair rose today, as traders react to the EU recovery meeting that started on Friday and ended on Sunday. The EU council ended without a deal, as we had predicted on Friday. The pair is trading at 1.1500, which is the highest it has been since March 10 this year.
EU recovery fund
The European Commission unveiled a 750-billion-euro recovery fund in May after a successful meeting between Angela Merkel and Emmanuel Macron. The commission proposed new measures to pay for the recovery, including higher taxes by tech giants and big polluters.
The proposal elicited mixed feelings in Europe where a group of countries drummed up their support. This included companies like Italy, Spain, and Germany. On the other hand, a group of countries led by Netherlands, Austria, Denmark, and Sweden rejected the deal.
This weekend, the two sides clashed in Brussels as they negotiated the details of the deal. The frugal countries proposed giving grants of 350 billion euros from the previous 450 billion euros. They also offered 350 billion in low-interest loans to the most affected countries. In a report, analysts at Danske Bank said:
“This also means that the lack of an agreement so far probably won’t move markets much today. Instead, investors’ focus will be on the share of grants to be included eventually in the agreement.”
Meanwhile, the economic calendar will be light today, with no major news from the United States and Europe. The only data is the German PPI and WPI number, which I don’t expect will move the EURUSD.
EURUSD technical outlook
The EURUSD pair is trading at 1.1463, which is the highest it has been since March 9. On the daily chart, the price is above the 50-day and 100-day exponential moving averages. The price has also moved above the important resistance level at 1.1422. The pair is also in a strong upward trend as shown by the ascending green trend line. The pair is likely to continue rising as bulls target the next resistance level of 1.1500.
On the flip side, a move below 1.13700 will invalidate this trend. This price is the lowest level on Thursday and Friday.