Merkel: European Union leaders will continue to discuss the bloc's 1.8 trillion euro plan

Reuters reported that the European Union leaders will continue to discuss the bloc's 1.8 trillion euro ($2.14 trillion) plan to recover from the recession caused by the COVID-19 pandemic, which has been vetoed by Poland and Hungary, German Chancellor Angela Merkel said.

''Hungary and Poland blocked the EU's 2021-2027 budget and recovery plan on Monday because access to the funds would be conditional upon respecting the rule of law.''

"There is consensus on the EU budget, but not on the rule of law mechanism," Merkel told journalists after a meeting with EU leaders late on Thursday.

"This (veto) means ...we have to continue talking with Hungary and Poland," she added.

Market implications

There have been growing concerns over the political environment for the euro in recent days.

''Faced with a period of inter-EU bickering on the budget and a possible delay on the Recovery Fund at a time when the pandemic is raging in the region, the EUR could be vulnerable,'' analysts at Rabobank explained.

''Given also the approach of the December ECB policy meeting, we see scope for a pullback towards EUR/USD1.17 on a 1-month view.''