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EURUSD - Surges to 18 Month High at 1.16 after Historic European Union Deal



EURUSD - Surges to 18 Month High at 1.16 after Historic European Union Deal
In the last two weeks the EURUSD has surged to an 18 month high above 1.16 after meeting some resistance at 1.13 for several weeks. For several weeks the EURUSD was trading between support at 1.12 and the resistance at 1.13 consolidating there, after easing from a then three month high above 1.14. Given the significance of the 1.13 level, this is likely to offer some support should the EURUSD decline from its current highs.

On its way to the then three month high above 1.14, the EURUSD moved through many key levels on its way, many of which have previously played a role in the EURUSD’s price action, including the 1.10 level which had been offering stiff resistance on several occasions throughout April and May.

Throughout the first half of this year the 1.0750 level offered solid support, as the EURUSD did well to consolidate in a range between 1.0750 and 1.10, having previously dropped surged back higher from a three year low near 1.06 to up above the key 1.11 level in the second half of May, before easing back below 1.10 again. The EURUSD could have been expected to experience some resistance from the previous peak around 1.15 from early March, and the fact that it surged right through that level bodes well for the strength of the current move.

In the middle of March the EURUSD fell sharply from its highest level in more than 12 months above 1.15 down to near 1.06 before rallying strongly in the week after, before easing below 1.10 in early April. Before the fall from 1.15, it had moved very strongly from a then three year low around 1.08. Most of the levels including 1.10, 1.11 and 1.12 have played a significant role in the last six months or alternating between providing support and resistance, and continue to do so. The 1.10 level has propped up the currency pair many times in the last 12 months and may be called upon again should the EURUSD decline further.

The European Union has reached a historic deal which will disburse 390 billion in grants and 360 billion in cheap loans to member countries based on criteria, including unemployment rate, to help them recover from the coronavirus pandemic.  Interestingly, the European Central Bank (ECB) President Christine Lagarde said that she believes the deal "could have been better".  However, Ms Lagarde tweeted, "Thank you for your resilience and determined action over the last days. We can only fight the economic consequences of COVID-19 by working together.  Today’s agreement by @EUCouncil shows that when most needed, the EU steps up and comes together to help the people of Europe."  The ECB President addressed the European leaders, thanking them for their “resilience” and their “determined action over the last few days”. A jubilant European Council president Charles Michel tweeted, “We did it! We have reached a deal on the recovery package and the European budget for 2021-2027. This is a strong deal. And most importantly, the right deal for Europe right now.”  France’s president Emmanuel Macron tweeted that it was ”a historical day for Europe”.

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