​Opposition to EU's Budget Increases Euro's Downside Risk

WikiFX News (18 Nov.) - Recently, EUR/USD grew to as high as 1.1869 amid the rising risk sentiment fueled by the progress in new vaccine and the signing of the Regional Comprehensive Economic Partnership (RCEP) Agreement. However, the pair remains at the risk of dropping down.

Executive Board member Isabel Schnabel stressed the need for “further monetary policy support to underpin economic activity” in light of the second wave of Covid-19 infections.

In addition, Hungary and Poland blocked approval of the EU's €750-billion economy rescue package. The two countries, who have been attacked over the rule of law so far, are opposed to the plan in its present form to tie rule of law criteria to budget decisions. A delay to the package may hamper the bloc's economic recovery, putting downside pressure on the euro.

According to EUR/USD trend chart, the pair's price is trying to break the recent high of 1.1869, while bearish RSI divergence suggests that a pullback towards the 1.1832 could be on the cards. Breaching that would likely result in price testing the 200-DMA of 1.17800.

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Chart: Trend of EUR/USD