EUR/USD may defend key support on the rising odds of US-China trade deal

• Risk assets rallied in Asia  and may remain better bid in Europe on hopes of easing US-China trade tensions.
• Trump told Reuters he may intervene in Huawei CFO case if it helps trade deal.
• Risk-on may help the EUR defend a key rising trendline support.

The EUR/USD pair may defend the support of the trendline connecting the Nov. 13 and Nov. 28 lows for the second day on the back of risk-on action in the equities.

The US President Donald Trump told Reuters that he would intervene in Huawei case if that helps him crack a trade deal with China. He added further that negotiations are already happening over the phone and if necessary, he would meet President Xi Jinping again.

Trump’s comments likely boosted hopes of US-China trade tensions and pushed up equities. The Asian heavyweights like Nikkei, Shanghai Composite, Kospi and S&P ASX 200 all reported gains. As a result, the haven demand for the US dollar weakened in Asia.

Notably, the risk-on action has likely hit the European shores. This is evident from the 0.7 percent in the Euro Stoxx 50 futures. The USD, therefore, may remain under pressure in Europe, helping the EUR/USD avoid a break below the rising trendline support, currently at 1.1312.

That support, however, would be breached if Brexit uncertainty overshadows the rising odds of US-China trade deal. Moreover, a daily close below 1.1312 would confirm a symmetrical triangle breakdown and shift risk in favor of a drop below the recent low of 1.1215.

EUR/USD Technical Levels