EUR/USD turns negative and challenges 1.1400 on USD recovery

• EUR/USD erases earlier gains and returns to the 1.1400 region.
• The greenback rebounds from daily lows and weighs on the pair.
• The EU Leaders Summit is expected to resume later in the session.

After recording new 4-month tops around 1.1470 during early trade, EUR/USD met some selling pressure and it has now receded to the 1.1400 neighbourhood.

EUR/USD now looks to the EU Summit

EUR/USD is now alternating gains with losses in the 1.1420/30 region as investors wait for the resumption of the debate around the European Recovery Fund at the EU Leaders Summit in Brussels (14GMT).

In the meantime, cautiousness ahead of the EU Summit appears to be collaborating with the renewed selling momentum around the pair, relegating to the back-burner auspicious news regarding a coronavirus vaccine (this time from the Oxford-AstraZeneca side).

In the calendar, German Producer Prices came in flat on a monthly basis in June and contracted 1.8% over the last twelve months. Additionally, the EMU’s Current Account turned to the negative territory in May, posting a €10.5 billion deficit (from €9.9 billion surplus).

What to look for around EUR

EUR/USD is slowly approaching the 2020 highs just below 1.15 the figure, always on the back of the persistent weakness surrounding the buck. As always, upbeat risk appetite trends continue to support the momentum around the euro in combination with the current recovery in the euro zone. In addition, firm hopes of a deal surrounding the recovery fund currently under debate in Brussels are also sustaining the momentum around the euro.

EUR/USD levels to watch

At the moment, the pair is losing 0.12% at 1.1411 and faces immediate contention at 1.1186 (61.8% Fibo of the 2017-2018 rally) seconded by 1.1168 (monthly low Jun.19) and finally 1.1147 (high Mar.27). On the upside, a break above 1.1495 (2020 high Mar.9) would target 1.1514 (high Jan.31 2019) en route to 1.1569 (2019 high Jan.10).