21.07.202009:08 Forex-elemzések és áttekintések: EUR/USD and AUD/USD: European Union approves a 750-billion recovery fund for the eurozone economy. The Reserve Bank of Australia fears high AUD rate

The strong news from Belgium did not support the European currency, as apparently, many traders were tired of the constant pressure from the EU summit. Fortunately, the EU leaders finally came into an agreement by Tuesday morning, deciding to approve a 1.8 trillion community budget for 2021-2027. Also approved was the recovery fund worth € 750 billion, which was proposed by the European Council.

The four-day negotiation was the longest in the history of the summit. According to German Chancellor Angela Merkel, finding a compromise turned out to be very difficult, but the results were very pleasing since it led to good emergency measures and efforts. At the meeting, there were also rumors that President of France Emanuel Macron pounded his fist on the table, urging his colleagues to be flexible and threatening to leave the summit if there was no compromise. Perhaps such made an impact on other participants in the summit, since it was clear to everyone that the political and economic future of the European Union would be even more complicated if they failed to make any agreement.

The main problem during the summit was the firm stance of the Netherlands, Austria, Denmark and Sweden, who believes that the current emergency plan is still necessary to save the integrity and unity of the EU. They advocate tough financing and development of conditions, including the return of borrowed money. The reports said that Germany and France have pledged to take on most of the debt problems in order to reduce the burden from the Nordic countries that impeded the conclusion of the agreement.

Meanwhile in the United States, a new package of assistance is being developed to help the areas most affected by the coronavirus pandemic. Fortunately, there is no such problem in the funds as in the EU, and US Treasury Secretary Steven Mnuchin said yesterday that he expects the next stimulus round, which will focus on helping children, creating jobs and developing a vaccine. In addition, the US Congress is considering writing off all small loans under the PPP program, and there has been a recurring proposal among Democrats and Republicans that it is necessary to restructure the credit lines that were used to pay salaries and other expenses allowed in the terms of the coronavirus prevention assistance program. The writing off of loans less than $ 150,

With regards to the technical picture of the EUR/USD pair, the situation remained unchanged, as risky assets did not rise much amid the announcement of an approval to the EU emergency plan. It left the quote trading in a side channel with a slight change in the immediate resistance level, and only a breakout from the resistance level of 1.1460 will increase the demand for risky assets, which will open the way to the highs of 1.1510 and 1.1570. But to give full support to the bulls, more coordinated actions are required, which are not yet available. Perhaps, traders are waiting for specifics on the EU summit, and on the conditions why it was still possible to agree on an agreement so quickly. On the one hand, many expected such a development of the situation, but on the other, there should be some nuances, because of which the northern countries made such concessions. The further direction of the euro will depend on such details. And if in the near future, the euro fails to get out of the range, a downward correction could occur, which may intensify after a breakout from the support level of 1.1415, which will quickly push the pair to the lows of 1.1310 and 1.1255.

AUD

The Australian dollar continues to rise, preparing for breakout from rather important resistance levels, which does not coincide with the wishes of the RBA, who expects the rate to weaken.

Nevertheless, the Reserve Bank of Australia said that stimulus monetary policy will continue for as long as necessary, and the regulator intends to continue to deal with indicators of employment and income of the population, as well as to support business in every way. There are no talks of introducing negative interest rates yet, and there are no reasons for intervention in the foreign exchange market. On this news, the Australian dollar crept to a fairly large resistance at 0.7050, a breakout of which will lead the quote to new highs at 0.7105 and 0.7140. In case of a downward correction, the nearest major support level is around the level of 0.6960.

During his speech, RBA Governor Philip Lowe said that strong GDP growth is required to reduce debt obligations, so they would like to see the Australian dollar weaken in order to revive exports. He reiterated that the Central Bank does not plan to intervene in the foreign exchange market.