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Euro dips from 4-month high vs dollar, but outlook well-supported

Credit: REUTERS/DADO RUVIC

The euro slipped against the dollar on Monday, as investors booked profits on earlier gains that took it to a more than four-month high on hopes the European Union would agree on a recovery fund for economies in the region hit by the COVID-19 pandemic.

By Gertrude Chavez-Dreyfuss

NEW YORK, July 20 (Reuters) - The euro slipped against the dollar on Monday, as investors booked profits on earlier gains that took it to a more than four-month high on hopes the European Union would agree on a recovery fund for economies in the region hit by the COVID-19 pandemic.

The fund is expected to be around 750 billion euros ($857.93 billion), of which 390 billion euros could be offered as grants.

EU leaders have made progress in Brussels after three days of talks, but they remain at odds over the composition of the recovery fund. The fund's backers initially proposed 500 billion euros of grants and 250 billion of loans.

Some countries objected to that much in grants. They saw 350 billion euros as the maximum, but showed signs of compromising.

"We can see some profit-taking in the euro," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto. "But I can still see it as well-supported on weakness as this deal is good for the European economy."

The euro hit a high of $1.1467 EUR=EBS and was last down 0.1% at $1.1412.

Analysts said the smaller the amount of grants, the more the euro would fall.

The EU summit was originally due to last two days. The fact that it is now continuing into a fourth day of negotiations is evidence that EU leaders are ready to do everything it takes to maintain unity in the euro zone, said Jane Foley, senior currency strategist at Rabobank in London

If they agree on a recovery fund, that would boost confidence in the euro regardless of the numbers in the deal, said Mike Bell, global market strategist at J.P. Morgan Asset Management.

Elsewhere, the U.S. dollar index USD=rose 0.1% to 96.002, recovering from a six-week low hit earlier in the session. Its gains, though, remain capped by expectations of more stimulus from Europe and from the United States.

That said, the U.S. Congress is bracing for a battle on the proposed stimulus bill, that could further boost safe-haven bids for the dollar.

U.S. Senate Democrats are prepared to block Republicans from moving forward on a partisan coronavirus aid bill, the chamber's top Democrat warned on Monday, as Republican leaders were expected to meet at the White House to discuss legislation.

The dollar rose 0.1% versus the yen to 107.14 JPY=EBS, and was up 0.1% as well against the Swiss franc to 0.9393 franc CHF=EBS.

========================================================

Currency bid prices at 10:11AM (1411 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=

$1.1415

$1.1426

-0.10%

+1.83%

+1.1467

+1.1403

Dollar/Yen

JPY=

107.1400

106.9900

+0.14%

-1.58%

+107.5200

+107.0200

Euro/Yen

EURJPY=

122.31

122.30

+0.01%

+0.30%

+122.9700

+122.1900

Dollar/Swiss

CHF=

0.9393

0.9384

+0.10%

-2.94%

+0.9410

+0.9374

Sterling/Dollar

GBP=

1.2629

1.2565

+0.51%

-4.75%

+1.2645

+1.2519

Dollar/Canadian

CAD=

1.3550

1.3576

-0.19%

+4.34%

+1.3600

+1.3550

Australian/Dollar

AUD=

0.7001

0.6995

+0.09%

-0.28%

+0.7005

+0.6974

Euro/Swiss

EURCHF=

1.0723

1.0723

+0.00%

-1.19%

+1.0776

+1.0721

Euro/Sterling

EURGBP=

0.9037

0.9088

-0.56%

+6.90%

+0.9138

+0.9032

NZ Dollar/Dollar

NZD=

0.6559

0.6556

+0.05%

-2.63%

+0.6569

+0.6540

Dollar/Norway

NOK=

9.2803

9.2928

-0.13%

+5.72%

+9.3228

+9.2467

Euro/Norway

EURNOK=

10.5940

10.6240

-0.28%

+7.69%

+10.6353

+10.5848

Dollar/Sweden

SEK=

9.0098

9.0334

-0.41%

-3.61%

+9.0640

+8.9870

Euro/Sweden

EURSEK=

10.2864

10.3285

-0.41%

-1.75%

+10.3395

+10.2871

Euro jumps to 4-month highhttps://tmsnrt.rs/3fN2M7r

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Olga Cotaga in London; editing by Jonathan Oatis)

((gertrude.chavez@thomsonreuters.com; 646-301-4124; Reuters Messaging: gertrude.chavez.reuters.com@reuters.net))

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

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