Euro hits highest level against US dollar in nearly two years on back of stimulus deal

The currency has gained 0.5% against the US dollar today on the back of yesterday's 27-member agreement

A selection of Euro coins of varying denominations sit on Euro banknotes in this arranged photograph in Rome, Italy, on Tuesday, July 21, 2020. The euro has stayed below $1.15 even after European Union leaders finally agreed on a landmark stimulus package -- yet, this should not be interpreted as a sign of weakness. Photographer: Alessia Pierdomenico/Bloomberg
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The euro rose to its highest since October 2018 against the dollar as the European Union’s agreement on stimulus spurred renewed demand for the region’s assets.

The currency advanced as much as 0.5 per cent and was trading at $1.1583 against the US dollar at 6.19pm UAE time on Wednesday as traders absorbed the impact of the accord, which allocates €750 billion (Dh3.19bn) to pull European economies out of the worst recession in memory, and tightens the financial bonds that hold the 27 nations together.

The shared currency “is clearly celebrating the improvement in its fundamentals”, said Jane Foley, head of foreign-exchange strategy at Rabobank.

“The size of the recovery fund is not huge and would likely be insufficient if another wave of lockdowns hit the continent. However, the fact that the EU were able to coordinate a compromise earlier than many had anticipated is significant.”

The region’s assets have rallied in response. Germany’s DAX Index is now almost positive for the year and the Stoxx Europe 600 Index has added $3.5 trillion (Dh12.8tn) in market value since its mid-March lows.