Euro Higher As EU Unveils Recovery Package

The euro moved up against its key counterparts in the European session on Wednesday, as investors await a stimulus plan from the European Union to support the bloc from the economic downturn caused by the coronavirus pandemic.

European Union Economy Commissioner Paolo Gentiloni said that the Commission is proposing a EUR 750 billion recovery fund.

The stimulus package will consist of €500 billion in non-repayable grants and €250 billion in loans.

European Commission President Ursula von der Leyen is due to present the proposal in the Parliament.

The EC has received the backing of Germany and France for €500 billion recovery fund last week.

European Central Bank President Christine Lagarde said the euro area economy is likely to contract as much as 12 percent in 2020 as member countries struggle to emerge from the coronavirus pandemic.

On a live webinar, Lagarde said that the actual economic outcome would come between the ECB's "medium" and "severe" scenarios. The mild scenario is outdated.

The euro firmed to 1.1031 against the greenback, strongest level since April 1. On the upside, 1.12 is possibly seen as the next resistance level for the currency.

The euro advanced to near a 3-month high of 1.0698 against the franc and near a 2-month high of 118.91 against the yen, after falling to 1.0589 and 117.71, respectively. Next key resistance for the euro is seen around 1.10 against the franc and 121.00 against the yen.

The EUR/GBP pair was up at a 5-day high of 0.8961, after having dropped to 0.8889 earlier in the session. Should the currency rises further, 0.92 is possibly seen as its next resistance level.

The euro rose to 1.5152 against the loonie, from near a 4-week low of 1.5055 seen at 5:00 am ET. The euro is seen finding resistance around the 1.55 region.

Reversing from early more than a 2-week low of 1.7625 against the kiwi and a 2-month low of 1.6454 against the aussie, the euro recovered to 1.7736 and 1.6577, respectively. The euro is likely to find resistance around 1.84 against the kiwi and 1.70 against the aussie.

Looking ahead, Fed's Beige book report is set for release in the New York session.