The EUR/USD currency pair extended its early-day gains and rose further to 1.1290 level ahead of the much-awaited negotiations on the European Union's (E.U.) long-term budget. However, the modest gains in the currency pair were supported by the hopes of a recovery package from the European Council president Charles Michel. On the other hand, the downbeat German Industrial data and the gloomy European Commission's economic forecasts, become the key factors that kept a lid on any additional gains in the currency pair. Whereas, the broad-based U.S. dollar strength backed by the risk-on market sentiment also exerted some downside pressure on the currency pair.
Moreover, the rising number of coronavirus cases weighed on the European equities, undermining the shared currency. At this moment, the EUR/USD Currency Pair is currency trading at 1.1290 and consolidates in the range between the 1.1263 - 1.1292. However, the European stock futures' nervous mood could be associated with the dovish comments made by the European Commission that "the E.U. economy will experience a deep recession this year due to the coronavirus pandemic, despite the swift and comprehensive policy response at both E.U. and national levels." However, these discouraging E.U. economic forecasts continue to weigh on the EUR/USD pair.
Traders seem cautious to place any strong position ahead of the much-awaited negotiations on the European Union's (E.U.) long-term budget and the recovery package. The European Council president Charles Michel is expected to present his compromise plan to capitals later this Wednesday. On the positive side, Newly-appointed French Prime Minister (PM) Jean Castex recently said via BFM TV, noting that "there won't be another coronavirus lockdown like we had in March." which might keep traders positive.
Apart from this, the risk-off market sentiment could be associated with the fresh report of coronavirus (COVID-19) outbreak, which suggested that there are almost 11.8 million COVID-19 cases globally as of July 8.
As in result, the broad-based U.S. dollar flashing green and took bids on the day as investors preferring to the safe-haven asset mainly due to concerns about the mounting coronavirus cases. However, the gains in the U.S. dollar kept a lid on any additional gains in the currency pair. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.06% to 96.895 by 12:09 AM ET (5:09 AM GMT).
Looking forward, the market participants will keep their eyes on the trade/virus updates due to the lack of major economic data to be published today. The speech by the European Central Bank (ECB) Vice President Luis De Guindos will be key to watch. Moreover, the sentiment on the European indices and USD dynamics will be closely followed for the pair's next directions.
Daily Support and Resistance
Pivot Point 1.1283
The EUR/USD is trading over a robust resistance to become a support area of 1.1265 level. As we can see, the EUR/USD pair has tested and closed series of neutral candles over 50 EMA level of 1.1270, which is supporting the EUR/USD prices. On the upper side, the next resistance is likely to be found around the 1.1303 level. But in case, the pair violates 1.1265 support, the next support is likely to stay around 1.1225 level. Good luck!