* EU deal cheered, although largely priced in
* Analysts say dollar set to struggle for now
* Aussie, sterling soar as risk sentiment improves
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Adds details, new analyst quote, euro/dollar chart)
By Tommy Wilkes
LONDON, July 21 - The euro hit its strongest since early
March on Tuesday after European Union countries struck a deal
for a massive stimulus plan to revive their coronavirus-hit
economies, while an upturn in sentiment sent the Australian
dollar to a one-year high.
The EU deal -- a compromise on concerns that thrifty northern
states had about handouts for more profligate neighbours -- was
hailed as an important signal of unity by Europe's leaders and a
foundation for economic recovery. With encouraging results from several COVID-19 vaccine
trials also boosting market sentiment and stock markets
rallying, a clutch of currencies notched up recent highs against
the safe-haven U.S. dollar. The euro EUR=EBS rose 0.2% to $1.1470 in Asian trading
hours, its strongest since March 9. Gains were tempered by prior
market expectations that a deal would eventually be agreed and
the euro's recent run higher as the recovery fund was
negotiated.
The single currency was last up 0.1% at $1.1454.
Analysts said there was little new information in the final
deal to spur the euro much higher immediately, with the
breakdown between grants and loans already known.
"For the time being, no further momentum for the euro can be
expected from either the fiscal or monetary policy side,"
Commerzbank analyst Esther Reichelt said.
"From now on, it is primarily the recovery of the real
economy and the development of (coronavirus) infections that
will determine how the euro will perform going forward,"
Reichelt said, adding that $1.14 was a justified price.
The dollar was flat when measured against a basket of
currencies, and last at 95.675 =USD .
ING analysts said they are looking for "more gains to $1.20
later this year as USD weakness kicks in" because the recovery
fund agreement is significant enough "not to prompt investors to
exit their long EUR positions (particularly against USD, where
the outlook for the remainder of the year looks bleak)."
The Australian dollar rose as much as 0.8% to $0.7071
AUD=D3 , its highest since July 2019, helped by the bullish
mood and after the central bank offered few surprises in minutes
from last month's meeting. AUD/
In a speech, Governor Philip Lowe also said that although he
would prefer a cheaper Aussie dollar, its 27% recovery from
March lows was supported by fundamentals.
The Canadian dollar climbed, with the U.S. dollar down 0.4%
to C$1.3484 CAD=D3 , a 5-1/2 week high for the loonie.
The Norwegian crown rallied. The euro fell 0.5% against the
crown to 10.51 crowns EURNOK=D3 , its weakest since June 10.
Sterling also added 0.4% to $1.2716 GBP=D3 , its highest
since June 11, and 0.3% against the euro to 90.20 pence
EURGBP=D3 .
The yen was little changed at 107.22 per dollar JPY=EBS .
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Euro vs U.S. dollar https://tmsnrt.rs/30wWQJh
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(Editing by Catherine Evans)