EUR traded flat against most other major currencies in the European session on Wednesday, as investors weighed improving economic data and a worrying rise in coronavirus cases. The EU single currency, however, fell against USD but rose against NZD, which remained under pressure after the RBNZ noted that the balance of economic risks remains to the downside and said that it was prepared to use additional monetary tools as necessary.

The latest survey by the ifo Institute revealed that Germany's business sentiment strengthened at a record pace in June on improved expectations as the coronavirus-related lockdown measures were eased across Europe. The Ifo Business Climate indicator for Germany jumped 6.5 points from the previous month to a four-month high of 86.2 in June, recovering further from an all-time low reached in April. Economists had forecast a score of 85. According to the report, the current conditions index climbed to 81.3 from 78.9 in May, while economists had expected a score of 84. At the same time, the expectations measure surged to 91.4 from 80.5 in May, while economists had forecast a reading of 87.

However, optimism was tempered by worries about the continued spread of the coronavirus and its impact on economic recovery. According to the Johns Hopkins Center for Systems Science and Engineering, the total number of confirmed global cases of the COVID-19 rose to 9,273,773, with the U.S. reporting 2,347,102 coronavirus cases, the most in the world. 

Bloomberg's report that the U.S. wants to impose new tariffs on $3.1 bln worth of imports from the EU and the UK also weighed on market sentiment.

Markets also continued to expect the European leaders to reach a compromise or agreement on the recovery fund. The EU heads are set to meet in Brussels on July 17-18 to discuss the EU recovery plan and long-term budget.

The ECB’s chief economist Philip Lane noted today that an outcome of EU recovery fund negotiations is an important factor affecting recovery of the European economy.