European session review: EUR appreciates, benefiting from EU's recovery deal and broad USD weakness

EUR traded mostly higher against its major counterparts in the European session on Monday. The European single currency was little changed against JPY and GBP, but rose against the rest of major rivals, as it continued to benefit from the adoption by the European Union (EU) leaders of a EUR750 billion fiscal stimulus plan last week as well as broad USD weakness.

The U.S. currency saw pressure in anticipation of the possible coronavirus rescue package from Congress and fresh support signals from the Federal Reserve, following its regular policy meeting on Tuesday and Wednesday. Escalating U.S.-China tensions, following the tit-for-tat closures of consulates in Houston and Chengdu last week, also weighed on USD. In addition, COVID-19 infections continue to rise in the U.S., and investors are doubtful of a fast economic recovery there.

Market participants also assessed the latest Germany's Ifo business confidence survey, which confirmed the improvement in sentiment. According to the report, the business confidence index rose to 90.5 in July from a revised 86.3 in June. This was the third consecutive increase in the index. Economists had forecast the indicator to rise to 89.3. Both assessments of the current situation (84.5 in July, up from 81.3 in June) and expectations (97.0, up from 91.6 in June) of companies improved in July.