EUR/USD loses upside momentum near 1.1030

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  • EUR/USD advances to tops near 1.1030, deflates afterwards.
  • European Commission proposed a €750 billion aid fund.
  • Fed’s Beige Book coming up next in the NA session.

After advancing to almost 2-month peaks in the 1.1030 region, EUR/USD lost upside momentum and it has now returned to the sub-1.1000 area.

EUR/USD boosted by fund news

EUR/USD has quickly broken above the key barrier at 1.10 the figure and move to fresh multi-week highs around 1.1030 after the European Commission proposed a €750 billion aid package (€500 billion grants, €250 billion loans) aimed at helping members recover (faster) from the coronavirus impact.

The EC’s announcement came in the middle of the conflict between France and Germany on one side and the “Frugal-4” (Austria, the Netherlands, Sweden and Denmark) on the other, all against the backdrop of persistent discussions and scepticism following the Franco-German proposal.

Earlier in the session, ECB’s C.Lagarde expects the economic contraction in the bloc to match the medium or severe scenarios. She also reiterated that the central bank’s main target is to ensure price stability, while she defended the implementation of exceptional measures to support liquidity.

What to look for around EUR

The 1.1000 level remains a tough barrier for EUR/USD for the time being. In the meantime, USD-dynamics keep driving the sentiment around the pair, always looking to the US-China trade jitters and the coronavirus economic aftermath. The recent better-than-expected results in Germany and the broader euro area along with positive prospects regarding the re-opening of some economies in the bloc appear to keep occasional bearish attempts contained, all helped by the solid position of the euro area’s current account. In the political scenario, the recent German court ruling against purchases of sovereign debt under the ECB’s QE programme threatens to widen the existing cracks within the euro area and could limit any serious recovery in the currency. This view has been also exacerbated after the French-German proposed fund to help economies to recover from the coronavirus fallout met resistance among some Northern-European members.

EUR/USD levels to watch

At the moment, the pair is gaining 0.29% at 1.1013 and a breakout of 1.1030 (monthly high May 27) would target 1.1147 (weekly high Mar.27) en route to 1.1186 (61.8% Fibo of the 2017-2018 rally). On the downside, the next support lines up at 1.0870 (weekly low May 26) seconded by 1.0774 (weekly low May 14) and finally 1.0727 (monthly low Apr.24).

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