The euro received a decent lift on Tuesday and manages to extend gains to one-week highs just above the 1.13 barrier. Despite the EURUSD failed to confirm the breakout, the tone surrounding the pair remains upbeat, suggesting further bullish attempts could be ahead. 

The common currency derived decent support from dollar weakness. The greenback remains on the defensive on Tuesday as risk sentiment improves following Trump’s positive comments on the US-China deal after a White House official added to the uncertainty surrounding the relations between the world’s two largest economies. as a result, the selling pressure surrounding the safe-haven dollar intensified and send high-yielding counterparts higher.

Also, euro bulls cheered fairly upbeat economic updates out of Europe. In particular, manufacturing PMIs in Germany, France, and the Eurozone came in better than expected and thus helped to lift investor sentiment further, suggesting the regional economy could rebound from the coronavirus pandemic sooner than expected.

On the other hand, rising coronavirus cases in several countries including Germany cap the euro’s bullishness. On Tuesday, the number of confirmed cases in Europe’s largest economy rose by 503 to 190,862 while the death toll rose by 10 to 8,895. 

From the technical point of view, EURUSD needs to confirm a break above the 1.13 barrier so that to refresh local highs and retarget more than three-month highs around 1.1420. At this stage, it looks like the common currency may need the additional catalyst for a decisive break above 1.13. As such, there is a possibility that the pair will correct lower in the immediate term before demand picks up again.   

In the longer term, the euro will be further affected by a general risk sentiment which in turn will depend on the developments surrounding the trade deal, coronavirus pandemic, as well as the central banks’ policy measures. Also, the incoming economic data will matter for traders as further signs of recovery could add to bullishness in the global financial markets. 


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