Euro jumps as European Commission seeks to raise €750 billion
The euro jumped today after it was reported that the European Commission was looking to raise about 750 billion euros. The funds will be used to help countries deal with the coronavirus pandemic. According to the Financial Times, the funds will be given to member states in form of grants. The commission is planning to propose a series of taxes that will help fund this spending. She will make a statement two weeks after Germany and France agreed to a joint recovery fund worth more than 500 billion euros. This grant format has been opposed by several countries including Netherlands and Austria. Earlier on, Christine Lagarde said that the eurozone economy would shrink twice as hard as it did in 2008.
US stocks are expected to rally today as investors remain optimistic about the US economy. Futures tied to the Dow Jones are up by 340 points while those tied to the Nasdaq are up by 0.70%. Investors are ignoring the risks of a trade conflict between the United States and China. Media reports suggest that the US is considering imposing sanctions on several Chinese officials because of the Hong Kong security bill. Also, investors are ignoring a warning by Merck’s CEO, who warned that companies developing coronavirus vaccine were overly optimistic about when they will be developed.
The Japanese yen remained in a holding pattern as investors reacted to the new $1.1 trillion stimulus package proposed by the government. The package will bring the total amount of money the government has allocated to deal with the crisis to more than $2.2 trillion. This amount is significant because Japan has a GDP of about $4.9 trillion. It is also a highly indebted country with a debt to GDP ratio of almost 200 per cent.
The EUR/USD pair rose to an intraday high of 1.1019, which is slightly above the 50-day and 100-day exponential moving averages. The price is also along the high swing made on May 1. Also, it is between the 50% and 38.2% Fibonacci retracement level. Therefore, the price may continue rising as bulls attempt to test the 50% retracement at 1.1066.
The XBR/USD pair rose to an intraday high of 37.24, which was the highest it has been since Thursday last week. The price is above the 50-day and 100-day exponential moving averages and is slightly above the 38.2% Fibonacci retracement line. The pair may continue moving higher as bulls attempt to test the 50% retracement at 39.38. On the flip side, a move below the 38.2% retracement level will invalidate this prediction.
The NZD/USD pair rose 0.6230, the highest it has been since March 3. On the four-hour chart, the price moved above the important resistance level of 0.6178. It is also above the 100-day and 50-day exponential moving averages while the RSI has moved to the overbought level of 70. Also, the price has remained above the Ichimoku cloud. Therefore, the pair is likely to continue soaring as optimism on the New Zealand economy resumes.