Euro jumped sharply after 27 EU nations agreed on a 750bn euros stimulus deal to help member countries that are struggling due to coronavirus spread. The news sent the euro 0.2% higher to a fresh four-month high of 1.1470 against the US dollar.
The news came out following five days of talks between the member countries. European stock markets also rallied amid grants and loans for the hardest-hit countries.
“The deal is a positive, a show of solidarity, securing a stronger economic recovery,” said Christopher Wong, senior FX strategist at Maybank in Singapore.
The US dollar, on the other hand, dropped sharply against the basket of currencies. The US dollar again fumbled below the 96 levels against a basket of currencies.
British Pound also grew against the dollar and other currencies amid increasing investor confidence over the economy.
“FX investors should keep in mind that Sterling embeds a ‘beta’ to broad market risk conditions,” says Michael Cahill, a foreign exchange analyst at Goldman Sachs.
The pound also grew sharply against the euro on Monday. The GBP surged to a week high at 90.33 against the euro. Australian dollar looks firm against the US dollar.
Some market analysts believe that euro is likely to gain momentum against other key currencies in the coming days, thanks to stimulus deal which will help struggling countries like Italy and Spain during the hard times.
Meanwhile, bear claims that the euro has already gained the value, and the future performance could also be dependent on other factors.
“Markets-wise, the positive news was already priced in,” Christopher Wong said. Further gains from here were likely to be “sticky,” although a break past the euro’s March top of $1.1495 could open the door for a rise to $1.16 levels,” he added.