Investing.com – The euro looked set to snap a four-day winning streak on Thursday after the European Central Bank left monetary policy unchanged, but the single currency could be set for a rocky end to the week as the EU gets ready to discuss the €750 billion recovery plan.
EUR/USD fell 0.25%, to $1.1381.
The European Central Bank held the rate on its main refinancing operations at 0%, and pledged to roll out more stimulus if the eurozone’s economic recovery slowed materially.
The ECB governor continued to call for fiscal support a day ahead of the two-day European Summit, at which EU leaders will discuss the European Commission proposals for a €750 billion recovery plan to help some of the economic bloc’s worst-hit members.
“It is important for the European leaders to quickly agree on an ambitious package,” Lagarde said.
Ahead of the talks, however, there are not many betting that the recovery plan, which requires the backing of all 27 EU member states, will be ratified as members disagree over how it should be funded.
The Netherlands, Sweden, Denmark, and Austria, known as the “frugal four,” have insisted that the funds should be released as loans rather than grants or subsidies.
“Having failed at their videoconference on 19 June to reach agreement on the detail, the leaders’ first face-to-face summit since the outbreak of the pandemic might again fall short of sealing a deal, despite new compromise proposals issued last week by EU President Charles Michel,” Daiwa Capital Markets said.