By Kate Duguid
NEW YORK, July 17 (Reuters) - The dollar was broadly lower on Friday as the euro rose to just under a four-month high, with negotiations underway between European Union leaders on a recovery fund that could lift the bloc out of the current recession.
EU leaders' views on a mass stimulus plan remained "diametrically different", Czech Prime Minister Andrej Babis said on Friday. The 27 EU heads are struggling to reach consensus on the 2021-27 budget, proposed at above 1 trillion euros, and a linked new recovery fund worth 750 billion euros, meant to help rebuild southern economies most affected by the pandemic.
The euro EUR= was up 0.49% at $1.144 late in the North American session, just off Wednesday's top of $1.145, its highest since the coronavirus financial crash in March.
"A positive outcome by the end of the EU summit Saturday could potentially be the euro's ticket to fresh highs for the year," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
If progress is made, the euro could break through the technically significant $1.15 level, which has not been touched since February 2019.
"Conversely, a disappointing outcome that merely kicks the fiscal can down the road would risk an unwinding of recent euro gains," Manimbo said.
Implications for the euro should the EU go ahead with its plan would be long-lasting, Marshall Gittler, head ofinvestment researchat BDSwiss, told his clients.
A deal "would make the euro more attractive as a reserve currency" by "establishing a central fiscal capacity that can respond to adverse shocks, which would make monetary union more stable", he said.
The dollar index =USD, which heavily weights the euro, was 0.36% lower at 95.930. The dollar was also weaker against the yen JPY= and the Swiss franc CHF=, as a risk-on move diminished appetite for safe-haven assets and bolstered U.S. equities.
The greenback's fall against rival safe-havens may suggest its appeal, even in times of crisis, has been waning given the resurgence of coronavirus infections in the United States.
That resurgence eroded consumer sentiment in mid-July, the University of Michigan consumer sentiment index showed on Friday, threatening the nascent housing and economic recovery. Some areas in virus hot spots in the populous South and West regions have either shut down businesses again or paused reopenings.
(Reporting by Kate Duguid in New York and Julien Ponthus in London; Editing by Steve Orlofsky and Tom Brown)
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