EUR/USD leaps to daily highs near 1.1260 on China headlines
- Spot moves higher following Chinese trade news.
- The greenback lunges to fresh lows and tests 97.00.
- China said it will impose tariffs on 5000 US products.
The now increasing selling pressure around the greenback is sponsoring the sudden up move in EUR/USD to fresh daily highs in the 1.1250/52 band.
EUR/USD up on trade headlines
Spot pushed higher to fresh tops after China said it will impose tariffs on 5000 US products worth around $60 billion. In addition rumours that China could be discussing the likeliness of dumping Treasuries are on the rise, all sparking a sharp knee jerk in the buck.
China’s announcement came in response to fresh threats by the US to impose tariffs on all Chinese products starting in August unless China make concessions, all following the lack of solid progress at the trade talks in Washington.
In the data space, the next relevant publication will be the ZEW survey in Germany and the euro area, expected tomorrow.
What to look for around EUR
Recent data in Euroland and Germany allowed market participants to believe that some healing process could be under way in the region amidst the ongoing slowdown. However, this scenario needs confirmation in the next months, while the current ‘neutral/dovish’ stance from the ECB is expected to persist for the reminder of the year and probable H1 2020. The broad-based risk-appetite trends and USD-dynamics are posed to rule the sentiment surrounding the European currency for the time being, all in combination with the onoging US-China trade dispute and potential US tariffs on EU products. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections in late May, as the populist option in the form of the far-right and the far-left movements appears to keep swelling among voting countries.
EUR/USD levels to watch
At the moment, the pair is gaining 0.23% at 1.1258 and a break above 1.1264 (high May 1) would target 1.1317 (100-day SMA) en route to 1.1323 (high Apr.17). On the downside, immediate support aligns at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 11 2017).