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EUR/USD has been rallying in response to a new EU fund and hopes for a vaccine. However, premature hopes and Sino-American tensions may trigger a correction, according to FXStreet’s analyst Yohay Elam.

Key quotes

“German Chancellor Angela Merkel and French President Emmanuel Macron announced a plan to boost the European budget by €500 billion to support the economies. The spread between Italian and German bonds squeezed and the euro rallied.” 

“Another reason for the rally stems from hopes for a vaccine for COVID-19 from Moderna. The news sent stocks rallying the safe-haven dollar down.”

“Investors are currently ignoring Sino-American tensions. Washington and Beijing have squabbled over funding to the World Health Organization, Huawei, and coronavirus..” 

“Coronavirus cases and deaths have continued dropping in the old continent, which is gradually opening up. However, the most recent figures are probably too low, the result of the weekend effect. Any setback may weigh on the euro.”