July 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)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.