During Monday's Asian trading session, the EUR/USD currency pair succeeded in extending its previous week's bullish rally and climbed to fresh 22-month high above the 1.1700 level, which remained supported by the upbeat Markit's preliminary PMIs for July. However, the gains in currency pair could also be attributed to the broad-based U.S. dollar sell-off, triggered by virus woes in the U.S., which contributed to the currency pair gains. Moreover, the bid tone around the shared currency was also supported by the optimism that the European Union has reached a highly-anticipated deal on the EUR 750 billion coronavirus recovery fund. At the moment, the EUR/USD currency pair is currently trading at 1.1700 and consolidating in the range between 1.1643 - 1.1724. However, the currency pair buyers seemed cautious to place any strong position ahead of the German IFO survey for June is due for release later today at 0800 GMT.
It is worth recalling that the preliminary July PMI for the eurozone was considerably better than expected. At the data front, the composite PMI was increased to 54.8 form 48.5 in June as both manufacturing and services rose. The manufacturing PMI rose to 51.1 from 47.4, whereas the services PMI climbed to 55.1 vs. 48.3.
However, the upbeat optimism that the European Union (E.U.) leaders agreed for a possible €1.8 trillion ($2.06 trillion) coronavirus spending package seems to have established the shared currency as a safe-haven.
At the US-China front, the tussle between the US-China picked up further pace after both countries ordered each other to close consulate offices in their respective countries, namely China's Houston consulate and the U.S. consulate in Chengdu, amid accusations of spying. In the meantime, the U.S. Secretary of State Michael Pompeo called for an end of "engagement," a policy that has defined U.S.-China relations for approximately 5-decades, which also fueled further the already intensified tussle.
Despite this, the broad-based U.S. dollar failed to gain any positive traction and reported losses on the day due to the record rise in daily COVID-19 cases. The U.S. dollar losses were further bolstered by the U.S.'s failure to deliver the additional coronavirus package. Although, the losses in the U.S. dollar could be attributed to the uptick in the U.S. stock futures. Whereas, the losses in the U.S. dollar kept the currency pair higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.47% to 93.933 by 12:15 AM ET (05:15 AM GMT), continuing its slide from Friday.
The pandemic was not easing at the coronavirus front and continued to hit the confidence about the economic recovery. The United States crossed 4 million officially recorded Covid-19 cases and covered a significant part of that recorded in just the last 15 days. It should be noted that the almost 1,000 above people died each day between Tuesday and Friday in the U.S. whereas, there were also a near-record 74,000 new cases on Friday. California, with a population of nearly 40 million, about twice Florida's, is now the worst-hit state, near 450,000 cases. Globally, the number of coronavirus infections has now crossed 16 million, as per the Johns Hopkins University report. However, the non-stop virus cases continuously affecting global economic growth. This, in turn, the U.S. dollar dropped to 22-month lows and helped the currency pair.
Daily Support and Resistance
Pivot Point 1.159
The EUR/USD traded dramatically bullish amid softer greenback to trade at 1.1704 mark, and closing beneath 1.1730 resistance mark can initiate selling unto 1.1685 level now. On the downside, the EUR/USD pair may gain support at 1.1686 level. A bullish breakout of the 1.1730 mark can extend the buying trend unto 1.1788 mark. While the breakout of 1.1685 can point EURUSD prices towards 1.1589 mark. Good luck!