Euro Rises to 18-Month High After EU Clinches Rescue Deal
(Bloomberg) -- The euro advanced to the highest level since January 2019 after European Union leaders agreed on a stimulus package to reboot pandemic-hit economies.
The common currency gained as much as 0.6% to $1.1516, as traders in the New York session pushed it above a key resistance level of $1.1495, its peak in early March. Looking ahead, $1.1595, the midpoint of its losses since February 2018, is seen as another pivotal mark. One strategist is forecasting the currency could rise to $1.30 for the first time in six years.
After days of negotiations, EU leaders agreed on an initial plan of 750 billion euros ($860 billion). The emergency fund will give out 390 billion euros of grants and 360 billion euros of low-interest loans. For the first time, member states will underwrite joint bond issuance.
The recovery fund will “give EU GDP a boost when their economy is likely recovering already -- so an added kick,” said Steve Englander, head of Group-of-10 currency research at Standard Chartered in New York. Englander forecasts the euro will rise to $1.16 by year end with risks to the topside.
The euro peaked Tuesday near a level where traders projected that a barrier was in place. Dip buying remains the preferred strategy among real-money investors and hedge funds, Europe-based traders said.
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