- The EUR/USD pair is seeing some buying interest around the 1.1300 level, as the US Dollar experiences selling pressure after a two-day upward move.
- The US government has signaled a readiness to negotiate a trade agreement with China.
- ECB’s Nagel cautions that the German economy may experience a shallow downturn.
The EUR/USD pair is stabilizing near the 1.1300 mark during Thursday’s European session, following a correction over the previous two days. This primary currency pairing is gauging support as the US Dollar (USD) encounters headwinds in its attempt to prolong its recent rebound. The Dollar Index (DXY), which measures the US Dollar’s strength against a basket of six major currencies, is finding it difficult to surpass the immediate resistance near 100.00.
Despite the slight declines observed on Thursday, market participants appear to be factoring in a continued recovery for the US Dollar in the short term, fueled by growing optimism regarding a potential easing of trade tensions between the US and China. The US government has expressed an interest in engaging with Beijing, but progress is contingent upon lowering the significantly elevated tariff levels.
At present, the US has implemented supplementary tariffs of 145% on Chinese goods, which includes a 20% tax on fentanyl, while China has raised tariffs by 125% on imports from the US. “Neither nation considers these levels to be viable in the long run,” stated US Treasury Secretary Scott Bessent on Wednesday. The Wall Street Journal (WSJ) indicated on Wednesday that the US administration might consider reducing additional tariffs on China to a range between approximately 50% and 65%.
