July 20 (Reuters) - The euro has been resilient in early Monday trade after three days of intense negotiations between European Union leaders on a pandemic rescue fund failed to produce an outcome, but with the door still open for a deal.
European Council President Charles Michel remained optimistic, saying he hoped the next day's headlines will be "that the EU has accomplished mission impossible" .
A proposal envisaging 400 billion euros in grants failed on Sunday evening with a group of north European states holding firm at 350 billion euros, so there is scope for further compromise.
Diplomats believe it is possible that EU leaders would try again for an agreement next month, as the gap in expectations between the "Frugal Four" and Germany, France and the Mediterranean countries is unresolved. If this is the case, investor patience could easily evaporate, resulting in EUR/USD correcting towards the July lows around 1.1200.
Technically the setup is very positive, with daily momentum studies, 5, 10 and 21 daily moving averages climbing. The initial target is a test of the long-resilient resistance around 1.1500; 1.1495 is the 2020 high from March, and above there lies the 1.1570 January 2019 top. A close below the 1.1359 10 DMA, a base on the close in July, would undermine the topside bias.
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eur 2 jul 20https://tmsnrt.rs/30sCQaL
(Andrew Spencer is a Reuters market analyst. The views expressed are his own)
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