EUR/USD: Room to rise but dollar demand may steal the show

Low expectations from the EU Summit open door to gains but while the common currency may find it easy to rise, EUR/USD may struggle with dollar strength due to ugly coronavirus and US economic data, Yohay Elam, an analyst at FXStreet, informs.

Key quotes

“I'm not a bad guy, I just want to see reforms – the words of Mark Rutte, PM of the Netherlands, as he entered the EU Summit. The Dutch PM also added that he sees a less than 50% chance of a deal this weekend, lowering already depressed expectations.” 

“Christine Lagarde, President of the ECB, urged leaders to agree on a much-needed fiscal package to compound her institution's efforts. The ECB left its policy measures unchanged and reiterated its commitment to do what is necessary. Lagarde previously cast doubts that leaders will shake hands – or press elbows – on a deal.”

“A lower bar is easier to cross – the euro has potential to rise if the first face-to-face talks will result in any kind of agreement. While the devil may be in the details, it seems that investors will buy any agreement which consists of a substantial boost.” 

“The safe-haven greenback has seen some demand as markets seem to see the glass half empty. US retail sales leaped by 7.5% in June – smashing expectations for a 5% increase. However, this V-shaped recovery in consumption was somewhat overshadowed by stubbornly high jobless claims, which stood at 1.3 million in the week ending July 10. Moreover, US coronavirus cases broke the daily record. Again. They hit 75,000 and the mortalities neared 1,000.”