- The EUR/USD pair relinquished a portion of its earlier advances as the US Dollar mounted a recovery, fueled by positive developments in US-China trade relations.
- Chinese authorities have reportedly rescinded non-tariff barriers previously applied to 45 US-based organizations.
- The European Union stands prepared to implement countermeasures should trade negotiations with the United States prove unsuccessful.
EUR/USD retraced approximately half of its intraday gains during Thursday’s European trading session. Despite this pullback, the primary currency pair remained in positive territory, trading marginally above the 1.1200 level at the time of this report, representing a 0.2% increase. The pair encountered selling pressure as the US Dollar (USD) partially offset its initial declines amid further signs of de-escalation in the ongoing trade dispute between the United States (US) and China. Market participants are closely monitoring upcoming economic data releases from both the Eurozone and the US, including inflation figures and employment reports, which could significantly influence the pair’s trajectory.
The US Dollar Index (DXY), a measure of the Greenback’s strength against a basket of six major currencies, rebounded to approximately 100.85, recovering from an intraday low of 100.60. This rebound suggests renewed investor confidence in the US Dollar as a safe-haven asset, particularly in light of the evolving trade landscape. The index’s performance is also being influenced by expectations surrounding future interest rate decisions by the Federal Reserve.
During the European trading session, US Treasury Secretary Scott Bessent conveyed that Washington is entering into a “series of negotiations” with China with the explicit aim of “preventing escalation” in trade-related tensions. Bessent’s remarks have bolstered investor sentiment, fostering the belief that the world’s two leading economies are actively committed to achieving a mutually agreeable trade accord, a development that would undoubtedly stimulate global economic expansion. “We [US] now have a mechanism with China counterparts,” Bessent further elaborated, indicating a structured framework for ongoing dialogue and negotiation. Market analysts suggest that a comprehensive trade agreement could lead to increased global trade volumes and reduced uncertainty, benefiting both economies and the broader international community.
Prior to US Treasury Secretary Bessent’s statements, reports surfaced indicating that Beijing had suspended non-tariff measures previously imposed on 45 US entities. These measures, initially enacted on April 4 following the implementation of reciprocal tariffs by US President Donald Trump on April 2, were reported by Reuters. The decision by the Chinese Commerce Ministry followed the agreement between Washington and Beijing to implement a 90-day truce in the trade war, which included a reduction in tariffs by 15%. This initial agreement aimed to provide a window for negotiations and prevent further escalation of trade tensions, offering a temporary reprieve for businesses and consumers on both sides. The recent developments suggest a willingness from both nations to engage in constructive dialogue and find common ground, although significant challenges remain in resolving the underlying issues.
