EUR/USD Flat in Wild Trading as EU Proposes €750B Covid-19 Stimulus Package

By Yasin Ebrahim 

Invesing.com – The euro was flat against the dollar, following a wild day of trading after EU detailed a €750 billion ($842 billion) coronavirus response plan that will seek to support some of the worst-hit economies in the bloc.  

EUR/USD was roughly flat at 1.0991, after hitting a high of $1.1031

The pooled relief program, which includes €500 billion in grants and €250 billion in loans to worst-hit economies of member states, still requires the backing of all 27 member states. Still, that is more than the €500 billion Franco-German proposals revealed last week.

Negotiations between the member states will take place over the coming months, and, if approved, some funds would be disbursed in 2020. But the largest share would come next year, when the first bonds would be issued under the program.

Some market participants, however, raised concerns about the lack of details on how the relief program would be financed. It is "unclear how the bonds issued to finance the fund are to receive a AAA rating," Commerzbank (DE:CBKG) said in a note.

"It is unlikely that an agreement as sought by the EU Commission will be reached by July and that the first funds will flow as early as September," the bank added.

The proposal comes ahead of the European Central Bank's monetary policy meeting next week, with many eyeing fresh forecasts, which will offer an update on the Covid-19 impact to the bloc's economic outlook.