The EUR/USD currency pair succeeded in extending its previous day winning rally and surged to 1.1585, supported by the reports that the European Union has reached a highly-anticipated deal EUR 750 billion coronavirus recovery fund. However, the gains in currency pair could be attributed to the modest upbeat trading sentiment possibly backed by the vaccine hopes, which undermined the U.S. dollar and contributed to the currency pair gains. Moreover, the bid tone around the shared currency was also supported by the positive comments of Christine Lagarde, President of the European Central Bank, that proportions between grants and loans in the E.U.'s fiscal package, which includes the recovery fund, were reasonable.
At the moment, the EUR/USD currency pair is currently trading at 1.1584 and consolidating in the range between 1.1564 - 1.1587. However, the currency pair buyers seemed cautious to place any strong position ahead of the E.U. parliament's ratification of the recovery fund. The upbeat optimism that the European Union (E.U.) leaders agreed on late Monday for a possible €1.8 trillion ($2.06 trillion) coronavirus spending package dimmed as the fund needs to be ratified by the E.U. parliament and some observers fear that politicians of the national Parliament may not approve the size of the final budget. Although, the currency pair may face deeper losses if the Parliament objects to the size of the recovery fund.
Elsewhere, the tussle between the US-China picked up further pace after the United States on Wednesday ordered China to close its consulate in Houston amid accusations of spying. In return, China also warned the U.S. to close the U.S. consulate in Wuhan in a tit-for-tat response. Additionally, President Trump said that it was "always possible" other Chinese missions could be asked to close, which further fueled the on-going tensions.
Apart from this, the virus cases continue to rise in the U.S., while Texas-registered one-day records for increases in coronavirus deaths and hospitalization on Wednesday. As per the latest report, the virus continues to take its toll on global economies, with approximately 240,000 cases reported in the last 24 hours, over 60,000 just in the U.S. Considering the current situation of the virus in the U.S., the U.S. President Trump said that things would get worse before getting better. The country would pay almost $ 2B to secure hundreds of millions of doses of the Pfizer/BioNTech coronavirus vaccine that Americans would receive for free.
Despite the rising U.S.-China tensions after the U.S. State Department ordered the Chinese consulate in Houston to close within 72 hours on Wednesday, the broad-based U.S. dollar failed to gain any positive traction and edged lower on the day. Nevertheless, the declines in the greenback could be short-lived or temporary as the coronavirus continuously picking up pace in the U.S.
Although, the losses in the U.S. dollar could be attributed to the uptick in the U.S. stock futures. The losses in the U.S. dollar kept the currency pair higher for the time being. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.08% to 94.852 by 13:10 AM ET (6:10 AM GMT).
The on-going depressive factors could dent risk sentiment and weigh over EUR/USD. The shared currency has recovered by 1.34% this week on broad-based dollar sell-off and due to optimism increased after the European Union decided to approve the highly-anticipated EUR 750 billion recovery fund.
The traders will keep their eyes on the German Gfk Consumer Confidence Survey (August) and ECB's De Guindos Speech. On the flip side, the weekly U.S. jobless claims are scheduled for release. In the meantime, the updates concerning the U.S. fiscal package discussions and vaccine news can offer intermediate moves to the pair.
Daily Support and Resistance
S1 1.137
S2 1.1465
S3 1.1517
Pivot Point 1.1559
R1 1.1612
R2 1.1654
R3 1.1749
The EUR/USD is trading with a bullish bias below 1.1600, which is working as a resistance for now. Traders seem to wait for the economic events, which may help drive bullish breakout in the EUR/USD prices. The pair may find support at 1.15028 level. On the higher side, a bullish breakout of the 1.1600 level can extend buying until 1.1685. The 50 periods EMA is suggesting a buying trend in the 4-hour chart. I will be waiting for a bullish breakout of 1.1600 level before placing any buying trade in Euro. Good luck!