- EUR/USD trades flat after Wednesday’s marginal losses.
- France says EU leaders could move ahead with a budget without Hungary and Poland.
- The Eurozone needs fiscal aid to combat the second-wave of the coronavirus.
EUR/USD fell 0.10% on Wednesday, ending a four-day winning streak as the US stocks dropped and the dollar regained poise. The focus now is on the European Union (EU) summit scheduled to happen on Thursday, where leaders could push ahead with the coronavirus recovery fund. The pair is currently trading near 1.1847, having faced rejection at 1.19 on Wednesday.
EU budget deal vital
The Eurozone faces the risk of a renewed economic contraction with the second wave of the coronavirus accelerating across the currency bloc. The consumer prices are already falling in a worrying sign for the European Central Bank, which is already running an ultra-accommodative policy and has scope to offer a dovish surprise.
As such, a strong fiscal response is the need of the hour. According to Reuters, a French official has said that leaders could push ahead with a post-coronavirus recovery fund and European Union budget without Hungary and Poland if the two nations continue to block the adoption of the long-term budget.
A budget deal would alleviate pressure on the ECB to do more easing and possibly lift inflation expectations, boosting demand for the euro.
Apart from the EU summit, the pair could take cues from the ECB President Christine Lagarde’s speech at 08:00 GMT and broader market sentiment. The futures tied to the S&P 500 are currently trading marginally lower on the day. The dollar will likely pick up a haven bid if the US stocks extend Wednesday’s decline.
Technical levels
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