The Euro is not going to stop. Overview for 21.07.2020

On Tuesday afternoon, the major currency pair is barely moving but investors are not ready to sell. 

EURUSD is standing still on Tuesday but wants to keep its positive momentum. The current quote for the instrument is 1.1443.

Overnight into Tuesday, the European Union summit, which lasted longer than planned, was over. Policymakers were looking for the way to solve the problem of launching the stability fund that is intended to help the European economy to recover – and they finally succeeded. The fund will amount to 750 billion EUR and support the region’s economy in its recovery after the coronavirus pandemic. 

The compromise lies in the combination of opportunities of contributing countries and the needs of receiving countries. First of all, it’s about the way of replenishing the fund: €390 billion from the package will be distributed in the form of grants to member states and €360 billion in loans to balance the risks. The so-called “Frugal Four”, which includes Austria, Sweden, the Netherlands, and Denmark was in favor of balance.

It is known that 70% of the funds should be used according to its intended purpose in 2021-2022, while the other 30% - in 2023. The total debt must be satisfied by the end of 2058. 

Each of the countries that require financial assistance must provide the European Union with the economic recovery plan along with the investment strategy, which will be considered by a panel of experts. After that, the European Union will approve the request. 

Among other interesting things that were discussed during the summit – the EU adopted tax amendments with the introduction of a new tax for non-recyclable plastics starting from 2021. The money will head into the EU budget. 

The fact of the agreement alone is obviously positive for the Euro.