Euro spikes as EU recovery fund talks end in disarray

The euro rose against peer currencies as traders focused on the recovery fund meeting held in Brussels during the weekend. The meeting, which was intended to find a middle ground on the €750 billion recovery fund, ended in disarray as northern countries disagreed with their southern counterparts. Media reports said that the so-called frugal four countries suggested a €700 billion fund made up of €350 billion in loans and €350 billion in grants. Other members like Germany, France, and Italy, have opposed this suggestion. The euro is probably rising because analysts still believe that the two sides will reach a deal in the coming months.

The Japanese yen pared losses made earlier today as traders reacted to the weak trade numbers from Japan. Numbers from the Ministry of Finance showed that the country’s exports declined by 26.2% in June after falling by another 28.3% in the previous month. In total, the country exported goods worth more than ¥4.86 trillion and imported goods worth ¥6.5 trillion. This was the 19th straight month of falling exports, which is an important factor since Japan is an export-oriented country. 

The British pound rose against the dollar and other currencies as traders downplayed the souring relationship between the UK and China. According to Chinese officials, the communist party is considering options to punish the UK for banning Huawei’s role in 5G. These actions could include punishing UK companies in China and scaling down Chinese investments in the UK. Meanwhile, the UK is also increasing its pressure on China. Yesterday, the government said that it would get rid of its extradition treaty with Hong Kong. 

EUR/USD

The EUR/USD pair rose sharply today as traders remained optimistic about the recovery fund breakthrough. On the four-hour chart, the pair is trading at 1.1457, which is the highest it has been in four months. The pair is also trading above the 50-day and 100-day exponential moving averages while the RSI is moving closer to the overbought level. The dots of the Parabolic SAR are below the price, which is a signal that the pair is likely to continue rising.

GBP/USD

The GBP/USD pair rose sharply as traders downplayed the rising China and UK risks. The pair is trading at 1.2618, which is the highest it has been since Thursday last week. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages. The commodities channel index has moved to its highest level since July 8. Therefore, while the pair may continue rising, there is a possibility of more volatility as the UK-China conflict escalates.

XAG/USD

Silver’s price soared to the highest level since September as traders reflected on an upgrade by Citi. The bank’s analysts expect the price will reach $25 in the next few months. On the four-hour chart, the price is above the ascending trend line shown in white below. It is also above the 50-day and 100-day exponential moving averages. The pair may continue to rise as bulls target the next resistance level at 20.0.