On Tuesday, the bloc’s common currency skyrocketed to its highest level against its American counterpart since January 2019 after the leaders of 27-member bloc had reached an accord on a mammothlike stimulus plan what analysts believe could revive the eurozone’s economy which had been menacing amid a pandemic induced economic slump, while the US Dollar index (DXY) measured against a basket of six major currencies on an average had rounded off the day sharply lower.
In point of fact, Tuesday’s gain of all six major currencies alongside emerging market coinages against the American Dollar comes over the heels of a €750 billion EU pandemic relief deal reached earlier on the day following almost five-day long schismatic negotiation, while market participants’ risk appetite had spurred up further following an improvement in global-scale demands alongside a rise in crude oil futures’ prices.
Sentiments rise against the backdrop of the EU deal
Besides, while the EU deal had scaled up investors’ morale substantially and prodded them to bet heavily on riskier assets in the wake of a withering outlook in US economy which had still been hindered due to a steady rise in pandemic cases, US lawmakers’ wrangle in the Capital Hill over an extension of the pandemic relief aid had added to further strains on to the American Dollar.
Amid such growing grudges lurking over the US economy, all six major currencies had registered robust gains on Tuesday’s FX market closure, while the bloc’s common currency had curtained off the day 0.69 per cent higher to $1.1527 against the US Dollar after hitting an intrasession high of $1.154, the bloc’s single currency’s highest level since January 11, 2019.
Meanwhile, as the ING analysts wrote in a client note that the euro had been headed towards $1.20-level after surging past the psychological resistance level of $1.15 a day earlier, the Australian Dollar had spiked to a 15-month high against the greenback to $0.7128, while the New Zealand Dollar jumped 1.08% to reach its highest level in six-month.
On top of that, while the greenback had also stomached deep ache against the safe-haven Japanese yen to 106.78, ING analysts were quoted saying that the clients should be looking beyond the $1.20-level for the bloc’s single currency as the EU pandemic relief fund alongside another €1.1 trillion in budgetary aid for fiscal year 2021-2027 had been significant enough to hold on to a “long buy” position for the eurozone currency until end-2020.