Can euro buyers make do with hopes of a EU recovery fund compromise?
The pair is certainly looking poised, keeping above 1.1000 in trading so far today but the challenge now is to try and hold a break above the 200-day MA (blue line) @ 1.1012 as well.
The euro is riding on hopes that the EU recovery fund proposal yesterday will be able to bridge the gap between member states and help provide some relief to the economy.
So far, the reception is mostly positive but the likes of Finland and Sweden have voiced some dissatisfaction. Meanwhile, we're yet to hear from key members such as Austria and Netherlands. But at least the reception from France and Germany have been positive.
In the bigger picture, this plan has been long overdue - discussions began all the way back in March - and will still likely be discussed further over the next few weeks. €750 billion is pretty much nothing when you compare it to the size of fiscal response in the US.
It may come as a case of being too little, too late but at least it is better than nothing.
That said, once again, it isn't even a certainty that this will play out smoothly from hereon.
From a technical perspective, a daily break above the 200-day MA @ 1.1012 will be encouraging for buyers and paves the way for a move towards the late March highs next.
As for sellers, they will be looking to keep a defense of that level and start nudging price back below the 1.1000 level to try and regain some momentum.
The dollar side of the equation remains tricky though. The greenback has been weakening for the most part amid the rise in equities but broke that correlation in trading yesterday. And as stocks look more buoyed today, the dollar is still holding its own in trading so far as well.
