Credit: REUTERS/Thomas WhiteJuly 20 (Reuters) - An agreement on the proposed European Union recovery fund is likely be taken as good news by those betting on EUR/USD to rise but it may be the foundation for a decline.
An agreement would be forced upon members out of necessity, not desire. It's unlikely to be repeated and would leave an already indebted EU with a bigger mountain of cash to pay back.
Risk-on headlines today are probably the foundation for future risk-off news. The debt sees a few richer nations supporting many troubled states; it may become the heart of future issues.
Traders who have bought into this year's EUR/USD rally may see bigger profits before the long-term decline is resumed.
This EUR/USD rise is a correction. 1.1370 was the minimum objective for a correction of the drop from 1.2556 in 2017. Fifty and 61.8 percent retracements at 1.1596 and 1.1823 are targets for an EU-inspired uptick but also point to book profits and consider a top.
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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
((jeremy.boulton@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
