EUR/USD range play continues ahead of Lagarde speech, EU summit

• EUR/USD keeps recent trading range with US-China tensions capping upside near 1.10. 
• ECB's Lagarde is likely to reiterate the need for fiscal stimulus. 
• The European Union is likely to deliver the long-awaited fiscal package on Wednesday. 

While EUR/USD registered gains on Tuesday, the ascent stopped just short of 1.10, keeping the multi-week trading range of 1.1019-1.0727 intact. At press time, the currency pair is trading at 1.0962, representing a 0.17% decline on the day. 

The decline could be associated with the worries about the US response to China's proposed security law for Hong Kong and the resulting haven demand for the greenback. 

Focus on Lagarde speech

European Central Bank's (ECB) President Christine Lagarde, during her scheduled speech at 07:30 GMT, is likely to shed more light on the central bank's response to the coronavirus outbreak and whether it stands ready to do more if required. 

Lagarde has long been calling for fiscal stimulus, which the Eurozone governments are yet to deliver. The President is likely to reiterate the need for governments to do more and support the central bank's efforts in battling the virus-induced slowdown. 

The European Union (WU) is likely to unveil a stimulus plan on Wednesday to help the bloc recover from the economic slump. "It is needed because countries like Italy, Greece, France, Portugal or Spain, burdened with high debt and deeply reliant on tourism, will find it more difficult than more frugal countries in the north to restart their economies through borrowing," Reuters report says. 

In the past, Netherlands, Sweden, Austria, and Denmark have opposed any stimulus plans that involve joint borrowing (community debt). Austria, however, looks to have softened its stance on the matter. "Austria is prepared to accept some grants in EU recovery fund," the country's finance minister Gernot Bluemel recently said, according to Bloomberg. 

So, the long-awaited stimulus could finally come through, lifting the single currency higher across the board. A convincing move above 1.1019 would confirm the range breakout and put the bulls back into the driver's seat. The demand for put options or bearish bets on the common currency has already weakened to the lowest level in over two months. 

However, if the size of the stimulus disappoints expectations, the single currency could face selling pressure. 

Technical levels

EUR/USD