ALB Limited 15.06.2020
Chart of the Day EURUSD will be tied to a critical political debate
The Euro will depend on the crucial political debate over the European Commission’s proposed EUR 750bn aid package. Since late May Euro has risen just over 4.5% against the US Dollar in large part due to two factors. The first has been the market-wide selloff in the Greenback, and the other has been cautiously hopeful signs of political unity in Europe. Euro strength was also due to the ECB’s unexpected addition of EUR 600bn to its Pandemic Emergency Purchase Program (PEPP). The news helped to bring sovereign bond yields on structurally distressed countries like Italy down and pushed the Euro higher. While fiscally-conservative European lawmakers in Austria, the Netherlands, Denmark, and Sweden expressed a preference for changing the constitution of the aid from grants to loans. Southern member states have been leaning more towards grants and debt-mutualizing measures like the coronabonds, which caused a political rift between North and South to widen amid the pandemic.
Important price points will be the 1.11 & 1.12 handle in the lower & mid region respectively, while 1.1450 will be the high point which will be near Euro’s 2020 high.
