The single European currency advanced across the board despite worse-than-expected macroeconomic data. The eurozone's industrial production climbed just 12.4% in May whereas analysts had projected more robust expansion to 15%. Germany's coincidence index measuring economic sentiment under the current conditions grew to -83.1 in July from -80.9. Experts had assumed a much better figure of -65.

Judging by the market sentiment, investors pin hopes that the eurozone's economy will be able to revive in the wake of the crisis much faster than other regions. The European countries seem to succeed in stamping out COVID-19.

Germany and France adopted severe lockdown measures. As a result, they tamed the coronavirus all right. The EU economy is on the path to the gradual recovery, experts at State Street comment on the developments.

The euro's broad-based advance pushed the US dollar index to near 95.82, the lowest levels since March.

When it comes to the fight against the pandemic, the US cannot boast that the authorities adopted more efficient counter-measures than in Europe. The thing that confuses the market is a high degree of uncertainty that makes it hard to predict anything, Commerzbank says.

Meanwhile, the US dollar is extending weakness despite upbeat data on the US inflation. Consumer prices in the US rebounded by 0.6% m/m in June to the strongest level in almost 8 years.

EUR/USD is rallying amid hopes that the EU leaders will come to the common denominator at the summit scheduled for Friday this week. The agenda will be devoted to the recovery fund for the worst pandemic-stricken countries.

Germany's Chancellor Angela Merkel is ready for a compromise decision for the sake of this idea. She and France' President Emmanuel Macron came up with the joint proposal to establish a rescue fund worth €750 billion.

At present, the market is less concerned about details, but does care about the EU integrity, Commerzbank noted. Investors are not interested in the divided EU.

Apart from the EU summit, EUR/USD found support from an announcement by US pharmaceutical company Moderna. The firm shared its success in inventing the COVID-19 vaccine.

Since EUR/USD gained momentum, the odds are that the currency pair is set to continue its climb towards a one-year high of 1.1492. Alternatively, the pair could not sustain momentum to break that level. On the whole, EUR/USD is following the steady uptrend as long as it stays firmly above the key support level of 1.1320, UOB strategists reckon.