Growing optimism over U.S.-China trade negotiations have helped EUR/USD rally back from three-month lows hit earlier in the session, but even a deal might not cure what ails the euro. Progress in U.S.-China talks should bolster hopes that trade tension between the EU and U.S. will be avoided and that a layer of uncertainty hovering over EU growth will be removed. But, the reality of lackluster euro zone economic growth -- especially in core larger members such as Germany, France and Italy -- means fear of recession in Europe will maintain its grip on the market.
Q4 GDP for Germany and Euro zone are due Thursday.
Downside surprises to those data would probably deepen the ECB's concerns about the risks to growth.
As it stands now Euribor rates reflect concerns about slower growth, with pricing for the ECB's first hike already pushed back to late 2020.
Until growth improves and euro zone rates see sustained rallies EUR/USD's gains should be short lived and the broad 1.1200-1.1600 range will hold.
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