FOREX-Euro maintains firm tone on EU joint recovery fund, yen soft

* Euro near 2-week high vs dollar, 5-week high vs yen
* Yen soft though doubts on vaccine stem its slide
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, May 20 (Reuters) - The euro held firm on Wednesday,
basking in the afterglow of a Franco-German proposal for a
common fund that could move Europe closer to fiscal union.
The dollar also edged higher against the safe-haven yen to
edge near a five-week high though it was capped by renewed
scepticism on coronavirus vaccine developments.
The euro stood flat at $1.0924 EUR= , having hit a two-week
peak of $1.09755 in European trade.
The common currency also fetched 1.0615 franc EURCHF= ,
after rising almost 1.0% so far in the week against the safe
haven currency while against the yen, it stood near five-week
highs of 118.20 yen EURJPY= .
"The Franco-German agreement is big news. This has made it
difficult for speculators to close their short positions on the
currency," said Kyosuke Suzuki, director of forex at Societe
Generale.
France and Germany proposed on Monday a 500 billion euro
($543 billion) Recovery Fund to offer grants to regions and
sectors hit hardest by the coronavirus pandemic and to allow
borrowing by the European Commission on behalf of the whole EU.
The proposals, while facing opposition from wealthier EU
members, could move the European Union a step closer to a
transfer union that would help mitigate various economic
imbalances in the currency bloc.
Also helping the common currency was a survey showing German
investor sentiment improved much more than expected in May as
concerns eased over the impact of the coronavirus pandemic on
Europe's largest economy. The U.S. dollar tacked on 0.2% against the yen to 107.94
yen, near a five-week high of 108.085 hit in U.S. trade on
Tuesday.
The U.S. currency lost traction on Tuesday after a report
from medical news website STAT said early data from Moderna
Inc's MRNA.O COVID-19 vaccine was insufficient, pouring cold
water on optimism sparked a day earlier by the company's
announcement. Data showed U.S. homebuilding dropped by the most on record
last month and permits for future construction tumbled, a stark
reminder of the heavy economic toll exacted by the outbreak.
The dollar index =USD stood at 99.571, essentially stuck
in its well-worn range since early April.
Sterling traded at $1.2251 GBP=D4 , flat so far on the day
while the Australian dollar fetched $0.65385 AUD=D4 , after
having hit a two-month high of $0.6585 overnight.