Let us check the market. Although primarily priced in, analysts cheered on the European Union deal. Analysts think that the United States dollar will struggle for now as risk sentiment improves. The sterling and Australian dollar soar. European Union countries made a deal for a massive stimulus plan. This would revive their coronavirus-hit economies. Thus, on Tuesday, the euro hit its strongest since early March.
Meanwhile, an upturn in sentiment sent the Australian dollar to a one-year high. The European Union deal is a compromise on concerns that thrifty northern states had about handouts for more profligate neighbors. Thus, the transaction is an essential signal of unity by leaders of Europe and a foundation for economic recovery.
The encouraging results of COVID-19 vaccine trials are boosting market sentiment. Moreover, stock markets are rallying. Thus, against the safe-haven United States dollar, a clutch of currencies notched up recent highs. This is the strongest point since March 9. The euro rose 0.2% to $1.1470 in Asian trading hours. Prior market expectations that a deal would eventually be agreed upon tempered the gains. Moreover, the euro’s recent run higher as the recovery fund was negotiated.
The euro was last up by 0.1% at $1.1454. With the breakdown between loans and grants already known, analysts said there was little information in the final deal to spur the euro much higher immediately. Esther Reichelt is an analyst at Commerzbank. She said that, for the being, no further momentum for the euro can be forecasted from either monetary or fiscal policy side.
From now on, it is primarily the development of (coronavirus) infections, and the recovery of the real economy that will determine how the euro will perform and go forward. Moreover, Reichelt thinks that $1.14 is a rational price. Against a basket of currencies, the United States dollar was flat and last at 95.675.
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