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EUR/USD advances to daily highs near 1.1360

  • Further USD weakness boosts spot to 1.1355/60.
  • DXY trades in session lows in the 96.40/30 band.
  • Progress in US-China trade talks gives oxygen to sentiment.

The better tone in the riskier assets is now pushing EUR/USD to print daily highs in the 1.1355/60 band.

EUR/USD focused on trade, Trump

After three consecutive small pullbacks, spot has managed to regain some shine on Monday and retake the mid-1.1300s amidst the continuation of the upbeat mood in the risk-associated complex.

The sentiment around the riskier assets has been boosted in recent hours after President Trump postponed the deadline for tariffs on US imports of Chinese products. In addition, and also collaborating with the risk-on mood, the UK government could ask for an extension of the Brexit deadline in the next days, although negotiations remain underway.

Looking ahead, key advanced inflation figures in Germany and the euro area are expected on Thursday and Friday, respectively. Additionally, testimonies by Fed’s Powell, the Trump-Kim meeting in Vietnam and the first revision of US Q4 GDP will also be in centre stage later in the week.

What to look for around EUR

The European currency continues to look to developments from the US-China trade talks for near term direction, while the effervescence on the US-EU trade front appear somewhat relegated so far. Recent poor prints from the euro docket and a ‘reality check’ from the ECB minutes appear to have exacerbated concerns over the deterioration in the bloc’s fundamentals and casted further shadows over the probability of any action on rates from the ECB later this year.

EUR/USD levels to watch

At the moment, the pair is gaining 0.23% at 1.1357 facing the next up barrier at 1.1371 (high Feb.20) seconded by 1.1381 (55-day SMA) and then 1.1392 (100-day SMA). On the other hand, a break below 1.1317 (10-day SMA) would target 1.1275 (low Feb.19) en route to 1.1234 (2019 low Feb.15).

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