By Yasin Ebrahim
Investing.com – The euro pared most of its gains against the dollar on Tuesday, despite cautious optimism over the coronavirus relief package, which experts say could deliver a boost to the single currency.
EUR/USD rose 0.14% to $1.0928, after easing from session highs of $1.0976.
France and Germany on Monday proposed a $500 billion coronavirus relief program to support an economic recovery in the EU. The stimulus proposal would be raised through bonds and is based on grants rather loans.
"EUR/USD is now looking to run the key 1.1000 level after the Germans and the French put forth a proposal for 500 billion euro rescue package that was based on grants rather than loans," BK Asset Management said.
If the Franco-German proposal is backed by members states, the European Commission would raise the funds through the public markets. The proposal is expected to discussed by EU finance ministers at their meeting on Wednesday, though the official decision-making process on both the EU budget and the recovery fund will only start with the release of the European Commission proposal expected next week, Goldman Sachs (NYSE:GS) said.
The euro's retracement from the highs of the day come even as Germany's ZEW index rose for the second straight month.