EUR/USD: Focus on weekly close and EU summit

• EUR/USD has recovered to 1.1390 from the NY session low of 1.1370. 
• The bulls need to print a close above the long-held 200-week SMA on Friday.
• EU Summit risk looms, the bar of expectations has been set low.

EUR/USD is trading well above the 200-week simple moving average (SMA) of 1.1333 at press time. 

The bulls have failed multiple times to establish a strong foothold above the 200-week SMA over the past few weeks. Hence, if the pair ends Friday (weekly close) above the key SMA, stronger chart-driven buying pressure may be seen in the near future. 

Looks to EU Summit

European Union (EU) leaders will meet physically in Brussels on Friday to discuss the coronavirus fiscal stimulus plan and a new long-term EU budget. The meeting will conclude on Saturday. 

Markets are aware of the fact that there are major differences between the member nations on the scale and scope of the recovery fund as well as on the budget. “Dutch opposition and a threat of a Hungarian veto weigh on chances for a deal on the EU’s 2021-27 budget envisaged above 1 trillion euros and an attached new recovery fund worth 750 billion euros,” according to Reuters. The recovery fund is being planned to support the southern nations, which rank high on the list of the economies hit worst by the coronavirus pandemic. 

Put simply, the bar of expectations has been set low. As such, the EUR will likely pick up a strong bid if the newsflow from the EU summit suggests that progress is being made toward some sort of compromise. 

Apart from the EU summit, traders are likely to take cues from the news flow related to the ongoing Sino-US tensions and the impact on the stock markets. At press time, the pair is trading at 1.1390, representing marginal gains on the day. 

• EUR/USD Price Analysis: Bounces from 100-hour SMA support

Technical levels