FX.co ★ EUR/USD: The direction of the euro will depend on the results of the upcoming ECB meeting and EU summit.

The closing of long positions in the European currency after another attempt to continue the bullish trend was not surprising, since traders were not sure what will be the decisions of the European Central Bank at its upcoming meeting. In addition, the EU summit will also take place, at which leaders will discuss the proposed plan of the European Commission regarding assistance to the European economy.

Meanwhile, the data published by the US Federal Reserve yesterday on the US industrial production generally confirmed that the US economy has embarked on a recovery path, but many economists fear that the recent surge on the coronavirus will significantly weaken this figure in the future.

According to the report, industrial production in the US grew by 5.4% in June this year, up from the forecast of 4%. Back in May, the indicator already showed a slight strengthening at about 1.4%, after collapsing by a huge 12.7% in April this year. In total, production decreased by 42.6% in the 2nd quarter, as compared to the 2nd quarter of 2019. It will take quite a while to restore it, moreso because the recent surge of the coronavirus may again create problems for businesses in the United States . The largest growth occurred in the manufacturing industry, where the indicator jumped 7.2%. Mining production declined 2.9%, while utilities grew 4.2%

Such growth increased the capacity utilization in June to 68.6%.

At the same time, data on production activity in the area of the New York Fed also came out quite positive. According to the report, the manufacturing index calculated in July was 17.2 points versus -0.2 points in June, better than the economists' forecast of 15.0 points.

A rather interesting report from BMO Capital Markets also came out yesterday, which stated that due to the increase in the balance of the Federal Reserve System and the current changes in fiscal policy, the US dollar began to recover. It is expected that in the near future, the liquidity of the dollar will shift towards redundancy.

As for the euro, demand for the currency is gradually declining, due to a series of weak macroeconomic reports on the eurozone economy. But if the European Union manages to cope with the repeated outbreak of the coronavirus pandemic, then, unlike the United States, demand for the euro will continue in the medium term, especially if the EU leaders approve the creation of a recovery fund after the coronavirus pandemic. However, the creation of the fund is unlikely to help the euro in the long run, most especially if countries such as Italy and Spain, which have a very high debt burden, do not begin to carry out the necessary reforms. The stabilization provided by the new fund will only temporarily help strengthen the euro.

Thus, with regards to the technical picture of the EUR/USD pair, nothing has changed much, and all the focus remains on overcoming the resistance level of 1.1420, a breakthrough of which will lead to active purchases of risky assets within the weekly high 1.1453. Meanwhile, a breakout from the level or 1.1453 will depend on what decisions will the ECB make during today's meeting, in which the first major support level is around the low of 1.1360 and in the region of the 13th figure. However, a breakthrough of which could jeopardize the entire upward trend.