20.07.202013:58 Forex Analysis & Reviews: EURUSD: The euro takes advantage of the opportunity: the EU Summit is extended for the 4th day. The proposed amount of aid to the southern EU countries has been reduced to 390 billion euros

The euro is gradually strengthening its position against the US dollar, as well as the British pound amid news that negotiations between EU leaders and 27 member states will continue this afternoon, as it is likely that consensus will be reached on economic recovery plans totaling 1.8 trillion euros. Such news appeared today, which immediately supported the European currency.

Let me remind you that the summit started last Friday. On Sunday, the parties announced its extension. The talks were held all night, and on Monday morning it was announced that after a short break, the parties will return to the dialogue in the afternoon. So far, after three days of discussions, no progress has been made on any of the most pressing issues. The European Commission's proposed aid plan aimed at lifting the European economy out of the deep recession triggered by the coronavirus pandemic has not yet been approved, and the main differences in the amount and direction of aid are still present. It is worth noting that if the parties can not agree, a strong fall in the euro will not occur, since there is still time and, most likely, by the beginning of autumn, during the next summit, which all experts focus on, a common language will still be found. But if decisions are made, it may lead to a positive reaction in the financial markets. However, it should be understood that if the approved amounts of aid and its types are seriously at odds with market expectations, the pressure on risky assets may resume even with a positive outcome.

At the very least, the fact that the parties agreed to extend the summit for another day indicates their desire to reach a compromise. Many of the parties' positions are supported on the scale of the fund and the ratio of grants to loans. It is known from sources that EU President Charles Michel proposed to reduce the amount of grants to 390 billion euros instead of the previously announced 500 billion euros. Even earlier, Michel proposed to make discounts on EU budget contributions for Germany, Austria, Denmark, Sweden, and the Netherlands, which will allow these countries to save in the future.

Today, the only important report on German producer prices was released. According to data, producer prices for industrial goods in Germany in June 2020 fell by 1.8% compared to June last year. Compared to May, there was no change in prices after they fell by 0.4% compared to April. Thus, the recovery in prices is rather sluggish after the removal of quarantine measures and the gradual return of the economy to functioning. The sharp decline in prices compared to June 2019 is directly related to low energy prices. The reduction was more than 20.5%. A slight increase was recorded in prices for consumer goods by 0.6%. For durable goods, the growth was 1.5%.

As for the technical picture of the EURUSD pair, it has not changed much compared to the morning forecast. Only a break in the resistance of 1.1455 will strengthen the demand for risky assets, which will open a direct path to the highs of 1.1510 and 1.1570. However, to fully support the bulls, new decisions on the part of EU leaders to help the Eurozone economy or good fundamental statistics are required. If the euro does not manage to get out of the above range in the near future, downward correction of the trading instrument is not excluded, which may strengthen after the breakout of the support of 1.1410, which will quickly push the pair to the lows of 1.1310 and 1.1255.