EUR/USD stuck in range as EU squabbles over coronavirus package

• EUR/USD is trapped in an 81-pip range amid and trades in an indecisive manner. 
• No debt-sharing consensus ahead of the Euro area summit could keep the single currency under pressure.
• Analysts caution against reading too much into the surge in Germany's Zew Expectations index.

The EUR/USD pair is trapped in an indecisive trading range defined by Monday's high of 1.0897 and Tuesday's low of 1.0816. 

The range play could be associated with the upbeat German data released Tuesday and the lack of consensus among the Eurozone member nations on debt mutualization ahead of Thursday's  European Union leaders’ virtual-summit.

The German Zew Expectations survey surged from 28.2 in April from March's -49.5 reading to its highest level in 5 years. "The dramatic swing is a reflection of investor confidence that the economy will start to turn around in the second half as the country gradually eases restrictions," said BK Asset Management's Kathy Lien. 

However, ANZ analysts have warned about reading too much into the improved sentiment, as the data has been very volatile and the road to recovery for Southern European nations is very unclear. "There are significant debt, deflation and political risks to be navigated," ANZ analysts mentioned in their Global Marco Insight note, dated April 22.

Further, opposition from the fiscally conservative nation for coronabonds and fiscal integration remains high, despite strong calls from Italy, Spain, and France.  "Europe is not yet ready to deepen fiscal integration," said ANZ analysts, while adding further that in the absence of comprehensive economic support, peripheral bond spreads may continue to widen, adding to bearish pressures around the single currency. 

With the Eurozone divided on community debt, many observers are worried that the finance ministers' may not be able to provide an appropriate fiscal stimulus to support growth. The EUR, therefore, could remain under pressure while heading into Thursday's event. 

A big beat on the Eurozone Consumer Confidence, due at 14:00 GMT, could put a bid under EUR/USD. The bias, however, will remain neutral as long as the pair is trapped in the trading range of 1.0897 to 1.08616. 

Technical levels