Forex Update, Tuesday, 21st of July, 2020
The forex markets were dominated from the positive note by the expectations of an agreement on the massive EU pandemic recovery fund coupled with the fresh hopes of three potential COVID-19 vaccines. Increased risk appetite drove flows away from the safe havens US dollar and Japanese yen.
The Euro climbed at 1.147 against the dollar on Monday night, at its highest level since early March, after the European leaders finally reached a deal on the proposed 750 billion-euro Coronavirus Recovery Fund that would help lift the EU out of its deepest recession since World War II.
After four days of marathon talks in Brussels, the 27 EU leaders agreed on a compromise that will cut the share of grants within the 750 billion-euro envelope to 390 billion euros, down from 500 billion euros originally proposed, and the rest in repayable loans.
The EU leaders failed to reach an agreement during the weekend after the so-called "Frugal Four", Austria, Netherlands, Sweden, and Denmark, pushed for a smaller recovery fund and asked for reforms in local economies.
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