eurusd
The EURUSD pair is little changed today as traders reflect on the EU recovery fund that was proposed by the European Commission in May this year. The meeting comes a day after the ECB delivered its interest rate decision. The EUR to USD pair is trading at 1.1384, which is slightly lower than the Wednesday’s high of 1.14500.
The biggest news of the day will be the upcoming EU leaders meeting that will take place in Brussels. This will be the first physical meeting of EU leaders this year. The core agenda is to deliberate on the 750 billion euro recovery fund that was proposed by the commission in March.
The proposal has created two sides in the bloc. On the other hand, there are countries like France, Germany, and Italy that support the structure of the deal. And on the other hand, there are countries like Netherlands, Austria, and Sweden that have rejected the proposal. They believe that the funds should be awarded to countries as loans.
To a large extent, the so-called “frugal four” are right about this because some of the biggest recipients, also have some of the worst fiscal strategies. For example, Italy has recently been in trouble for expanding its budget deficit. In a statement, analysts at Danske Bank said:
“We are not confident that an agreement will be reached this weekend, but we expect it to be reached before the European commission starts its summer holidays in August.”
The same view was shared by analysts at ING who wrote:
“EU leaders are edging closer to a deal on a recovery fund. A lot is still at stake at the coming EU summit, but a deal does seem to be within reach.”
In addition to this meeting, the EURUSD pair will react to housing starts and building permits numbers from the United States. Analysts see the housing starts jumping to more than 1.16 million in July and building permits rising to 1.29 million. These numbers will come a day and after the country released upbeat retail sales numbers.
The EURUSD pair is trading at 1.1384 and is in the red for the second straight day. On the daily chart, the pair formed a shooting star pattern on Wednesday. Also, the price is slightly above the 50-day and 100-day exponential moving averages. It is also slightly below the important resistance that is shown in black.
This resistance is the highest swing on July 10. Therefore, there is a possibility that the price will continue moving lower to the 23.6% retracement at 1.1258.
On the flip side, a move above Wednesday’s high of 1.1447 will invalidate this thesis.