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The EUR / USD pair is trading in a narrow range ahead of the two-day meeting of EU leaders on July 17-18, during which the fate of the eurozone economic recovery fund will be decided.
According to experts, EU leaders will have a hard time finding a common ground with regards to the 750-billion assistance plan to combat the coronavirus pandemic.
Prime Minister Mark Rutte of the Netherlands even believes that the chances of reaching an agreement is less than 50%.
Rutte is the unofficial leader of the so-called "Mean Four", or the countries that oppose the basic principles of forming the EU economic recovery fund. It includes the Netherlands, Austria, Denmark and Sweden. Representatives of these countries argue that the proposed amount of the recovery fund is too large, and the fund itself should be based on loans, not grants.
Meanwhile, Giuseppe Conte, Prime Minister of Italy, one of the EU countries most affected by the coronavirus, is pushing for an early consensus on this issue. Chancellor of Germany Angela Merkel and ECB President Christine Lagarde are voicing the same call as well.
As a result, investors do not have high hopes for the upcoming EU summit.
Nevertheless, despite low expectations, the EUR / USD pair still has a chance of rising, especially if the meeting comes out with good news. It is assumed that market participants will buy positions in the euro if the leaders were able to find an agreement in the recovery fund.
But the bulls still need to overcome the resistance of the dollar, which continues to attract investors as a safe asset.
As for macroeconomic statistics published yesterday, the report showed that US retail sales in June exceeded forecasts by coming out at 7.5%, much higher than the expected 5%. However, unemployment in the country remains at a high level, which casts doubt on the confident V-shaped recovery of the US economy. In addition, coronavirus infections in the United States continue to establish antirecords, in which over the past day, more than 77 thousand new cases were registered in the country.
Indeed, the euro has chances of growing, but the increasing demand for the dollar may reduce these.
"The EUR/USD pair fell again below 1.1422, after briefly increasing to 1.1452 earlier this week. Nevertheless, we still expect a breakout from 1.1495 and a rise to 1.1570. The pair will maintain a "bullish" mood, while holding above the two-month support line at 1.1302," said strategists at the Commerzbank.
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