Date: 28 May 2020
The euro’s winning streak has continued into early Thursday trading having started on Tuesday and has so far translated into a gain of more than 1% to the US dollar. The single currency’s strength results from the EU Commission’s plan to prop up the economies of its members that have been battered by coronavirus, with a total of €750 billion in the shape of grants and loans. This could be a moment of historical significance, marking the first step towards a form of pan-European mutualized debt. There are systemic unbalances within the union that can only be corrected through some form of fiscal redistribution, and this recovery fund could mark the birth of a form of European solidarity without which the viability of both the single currency and the union itself could be in question.
Ricardo Evangelista – Senior Analyst, ActivTrades
The gold price rebounded after the ECB issued a new stimulus proposal. We are seeing an interesting challenge between the risk on scenario, which is dominating the markets and it is overall negative for bullion, and the hyper expansive monetary policies from central banks, which are supportive for the bullion price.
Technically, after a new test to the support zone at $1,700, the spot price rebounded up to $1,720. It is clear that investors are betting that the ECB’s dovish decisions, which follow similar moves by the Fed and the BoJ, will remain in place for a long time and will potentially even be increased in the next few months as well as being followed by other central banks introducing similar policies.
Carlo Alberto De Casa – Chief analyst, ActivTrades
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