On Wednesday, the Euro continues to trade strong against the US dollar after having risen past the 1.13 level in the previous session over optimism about economic recovery in the Eurozone following the release of promising PMI data. At the time of writing, EUR/USD is trading at around 1.132.

An improvement in the risk appetite in global financial markets has also supported recent gains in EUR/USD as traders choose to focus on signs of economies improving as countries emerge out of lockdown, instead of being weighed down by fears about a possible second wave of coronavirus. There was also an air of optimism after US government officials spoke in favor of the US-China trade deal and sought to reassure markets that the phase one trade deal remains intact, helping lower the impact of US-China tensions on markets as well.

EUR/USD is also bullish on account of a weakness in the US dollar, which has seen its safe haven appeal diminishing against the backdrop of rising hopes for economic recovery. This has helped riskier currencies climb higher, and the single currency has also benefited from this development.

Additional weakness in the dollar was also driven by the release of PMI data, which revealed that business activity in the US contracted for the fifth consecutive month during June, even as the government began to ease lockdown measures. However, like in the Eurozone, the rate of contraction has slowed down in the US as well, indicating that the economy is working its way towards recovery in the aftermath of the pandemic.