In a landmark deal that was reached yesterday, European leaders finally clinched a deal for a budget and recovery fund worth 1.8 trillion euros. The stalemate in the European parliament was finally broken after Germany negotiated an agreement that suited Poland and Hungary.
The two countries were resisting the proposal until yesterday due to fears that the EU could stop their funding on the grounds of them not upholding the rule of law. There is a rift of opinions in Warsaw and Budapest contrasting to other European countries; namely, relating to issues such as an independent judiciary and preserving the democratic principles.
Despite this unravelled gap of socio-political opinions in the heart of the bloc, which could pose a significant threat for the union's stability in the future, the stricken accord represents a major stepping stone for the European economies in their bid to recuperate from the coronavirus crash.
Deal on the #MFF and Recovery Package #NGEU— Charles Michel (@eucopresident) December 10, 2020
Now we can start with the implementation and build back our economies.
Our landmark recovery package will drive forward our green & digital transitions. #EUCO
The news came shortly after the ECB decided to make its underlying monetary policy stance even more accommodative by boosting the envelope of its Pandemic Emergency Purchasing Programme (PEPP) with an additional 500 billion euros.
Thereby, the matching monetary and fiscal policies of the ECB and the European Parliament are bound to play a significant part for the post-pandemic recovery of the European economies. Meanwhile, another point of contention for the European integrity continues to be the stalemate in the Brexit negotiations.
At any rate, the news comes at a particularly 'happy' time for the Euro. As can be seen on the daily chart below, the EURUSD currently finds itself at the top of a massive uptrend.
Nevertheless, there is mounting evidence suggesting that the pair might be due to establishing at least a minor bearish correction; potentially sliding to the nearest Ichimoku cloud. Such expectations are substantiated by the Stochastic RSI indicator, which demonstrates rising selling pressure.