Investors are seeking shelter in light of the news on the COVID-19 front. The US reports a surge of new coronavirus cases, Australia re-imposed lockdown measures, and a new outbreak has been recorded in Asia. Such developments boost demand for safe haven assets. Amid risk aversion, the greenback has regained footing versus major rival currencies.

The US dollar index has got firmly stuck at a trading range of 96 – 98 points, analysts at the National Australia Bank noted.

They reckon a serious shift towards risk-on mood is needed to see the index testing the lower border of that trading range.

The non-manufacturing PMI from ISM came out beyond expectations. The indicator of the service sector's business activity jumped to 57.1 in June, much higher than the projected 50.0 score. Nevertheless, this has not dispelled fears about the devastating pandemic impact on the US economy.

Citing Raphael W. Bostick, the Federal Reserve Bank of Atlanta President, the fragile recovery of the US economy is running the risk of being disrupted due to a spike in coronavirus cases in the South and West of the country.

Amid the broad-based advance of the US dollar, EUR/USD retreated from two-week highs at near 1.1329.

Meanwhile, the euro is weighed down by a sluggish economic recovery.

On Tuesday, data showed that Germany's industrial production rebounded 7.8% in May following a record slump of minus 17.5% in April. Nevertheless, experts had projected more robust expansion of 10.0%. It proves that business activity in the key sector of the German economy remains subdued.

Today, the European Commission posted a revised GDP outlook for 2020. The eurozone's economy is expected to plunge 8.7% this year. This is going to be the steepest contraction on record. In the previous forecast released in May, the European Commission had reckoned a 7.7% drop this year.

"The economic impact of the lockdown is more severe than we initially expected," Vice President of the European Commission Valdis Dombrovskis said in a statement accompanying the release of the downgraded forecasts. The EU economy is on a roller coaster facing a lot of headwinds, including a threat of a new pandemic wave, he added.

The European Commission warns that Europe's capacity to exit recession is crippled by the COVID-19 damage to the US economy and key emerging markets for EU exports like Latin America and India.

Among the EU countries, Italy, Spain, and France are expected to reveal the sharpest rates of GDP contraction this year. Their national economic output is projected to plummet 11.2%, 10.9%, and 10.6% respectively.

According to analysts at OCBC, EUR/USD is now flirting with local lows at near 1.13 amid the US dollar's advance across the board.

The most popular currency pair again failed to break the level of 1.1350 which confirmed its status of strong resistance. Its breakout could open the door for the bulls to the area of 1.1420 – 1.1430. Support is seen at 1.1280. Under such market conditions, it would be a good idea to wait until one of the borders of the trading range is clearly breached. This direction will determine a further trajectory of EUR/USD.