The European currency rises to touch a significant level at $1.15. The summit at Brussels will be the deciding factor for the EUR exchange rate trend this week.
The EUR exchange rate continues to outperform other currencies, with expectations of an agreement on the Covid 19 recovery package.
EUR Exchange Rate Against the Dollar
The European Union leaders gathered for talks in Brussels. The summit extended for the third day on Sunday regarding the 750 billion euro economic recovery package and the â‚¬1.85 trillion EU budget. This pandemic has caused extensive damage, but talks by leaders continue to remain deadlocked as negotiations continue. The Euro exchange rate now waits for Sundayâ€™s decisions in Brussels.
The EUR exchange rate against the dollar touched levels of 1.4594 on March 9, 2020. Traders are ready for a target of 1.5 in the EUR/USD pair which it reached earlier on Jan 31, 2019.
EUR/USD, which closed at 1.428 on Friday, 17 July, faces stiff resistance at 1.1444 and 1.1452 levels. 1.15 now seems reachable if the Brussels talks conclude positively on Sunday, 19 July. However, the pair has strong support at 1.370 and 1.240 levels. The EUR exchange rate gets support from the weakening dollar.
The greenback is struggling to bounce from recession. Further, the resurgence of the coronavirus is affecting the economy. The US economy, which is known to bounce back after any crisis, has kept the US dollar trading stronger. But currently, the reeling US economy shows poor performance, while Europe and Asia have been able to battle the crisis better, say analysts.
Sterling Trades Lower
Sterling has been heading lower after disappointing GDP data. The month on month data came at 1.8%, much less than the anticipated 5.5%.
The EUR/GDP pair, which showed rapid recovery throughout the week, is expected to continue with its winning streak. The Euro exchange rate against the Sterling remains subdued after touching high levels of 0.9503 on 19 Mar 2020.
The pair closed at 0.9093 on Friday, 17 July. It faces strong resistance at 0.9137 and 0.9179. On the downside, it has supports at 0.9055, 0.8930, and 0.8863.
The EUR/JPY pair has been trading on the positive side through the week ending 17 July 2020. The Euro exchange rate against the Japanese Yen has marched forward from levels of 120.80 on Friday last week to close at 122.29 this Friday, with a jump of 1.2%. If it crosses 122.89, it can rally to 124.46 soon. It has strong support at 121.80 and 120.28.
Japan will publish its consumer price index on Tuesday. On Wednesday,Â it will present its the countryâ€™s manufacturing PMI.
The British pound has been on a downtrend this week. The pair closed at 1.2622 on Friday, 10 July. But it swung downwards to close at 1.2567 of Friday, 17 July. The currency pair has lost 0.43% for the week. On Tuesday, it slid to levels of 1.2479.
The pair has strong support at its 20 DMA and 50 DMA. Short-term support levels for the GBP/USD exchange pair are at 1.2510 and 1.2459. If it weakens further, it may touch levels of 1.2251. On the upside, it has strong resistance at 1.2625 and 1.2671. If it crosses 1.2814, it will move towards its long term resistance of 1.35.
Once the Oxford vaccine against the Covid-19 trial comes out successfully, the pair will turn positive.
US Dollar Wanes With
The dollar was trading at 95.930 against the Euro exchange rate. With the appetite for safe-haven assets decreasing, the dollar saw a weakness against the JPY yen and CHF Swiss franc. The greenback has been waning with the coronavirus infections surging again in the United States.
Further, the trade war between the United States and China will increase the demand for the US dollar say, analysts. However, if the long-term Treasury yields decline, it will affect the dollar.
In Asia, major central banks have unveiled stimulus measures to revive the failing economy. South Korea has a sound current account position and better yields. Foreign investors have invested $2.87 billion in South Korean bonds. The low fiscal deficit is another reason for attracting inflow into Korean bonds, feel analysts.
In Australia, the RBA governor Philip Lowe will be addressing the nation on Tuesday regarding the Labour Market and the Public-sector Balance Sheets.
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The German Chancellor Angela Merkel warns that they might not come to an agreement by the weekend on the coronavirus stimulus plans. Negotiating talks continue to run into the third day. The Euro exchange rate,Â which awaits a further up move from the stimulus package, may see a break in case they do not manage to come to a consensus.