FOREX-Euro ticks up on EU joint recovery fund, yen near 5-week low

* 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 while
the yen languished near five-week lows amid mildly positive risk
sentiment.
The euro inched up 0.15% to $1.0940 EUR= , near a two-week
peak of $1.09755 reached the previous day, a break of which
could open the way for a test of its May 1 high of $1.1019.
The common currency also fetched 1.0615 franc EURCHF= ,
after rising almost 1.0% so far in the week, and could book its
first monthly gain in six if the uptick is sustained.
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 could move the European Union a step closer to
a transfer union that would help mitigate various economic
imbalances in the currency bloc.
But they could face opposition from some wealthy and
fiscally conservative nations and some analysts cautioned it is
too early to tell whether an agreement can be reached soon.
"It is a big step for large scale European fiscal support
that Germany has changed its stance. But a EU-wide agreement
still does not look easy," wrote Keiko Tasaka, senior economist
at SMBC Nikko Securities.
The U.S. dollar tacked on 0.1% against the yen to 107.78
yen, near a five-week high of 108.085 hit in U.S. trade on
Tuesday.
The safe-haven yen was on the back foot as broad market risk
sentiment stayed upbeat, with U.S. stock futures gaining 0.7% in
Asia, paring much of the losses triggered after a report from
medical news website STAT said early data from Moderna Inc's
MRNA.O COVID-19 vaccine was insufficient.
That report had poured cold water on optimism sparked a day
earlier by the company's announcement on progress in vaccine
development. An effective vaccine is seen as the key to
normalise the economy to levels before the pandemic.
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.