EUR/USD jumps to fresh weekly highs above 1.2450 on sudden USD selloff

• Sharp drop in the US T-bond yields weighs on the USD.
• US Dollar Index slumps below 97.30.
• Markets don’t seem to be optimistic about today’s trade talks.

After having struggled to make a decisive move above the 1.12 handle since the start of the week, the EUR/USD pair gained traction in the last hour and refreshed its highest level in a week at 1.1252 boosted by the broad USD weakness. As of writing, the pair was up 0.48% on a daily basis at 1.1245.

Concerns over China not giving in to the U.S. demands and the Trump administration hiking the tariff rate up to 25% on $200 billion worth of Chinese goods seem to be keeping investors away from risk-sensitive assets. The rising demand for safer 10-year Treasury bonds weighed on its yield and forced it to lose more than 2% on the day and  fall below the 3-month yield to trigger a USD selloff. The US Dollar Index, which has been moving sideways near mid-97s since the start of the week, was last down 0.27% on a daily basis at 97.35.

According to South China Morning Post, ahead of today’s high-level talks in Washington,   China’s Ministry of Commerce spokesperson Gao Feng said that China is committed to safeguarding its legitimate rights and interests.  

Earlier in the day, the data published by the U.S. Census Bureau revealed that the U.S. trade deficit in March widened to $50 billion from $49.3 billion in February but was largely ignored by the market participants.

Technical levels to watch for

The initial resistance for the pair aligns at 1.1250 (50-DMA/daily high) ahead of 1.1300 (100-DMA) and 1.1325 (Apr. 17 high). On the downside, supports are located at 1.1200 (psychological level/20-DMA), 1.1165 (May 7 low) and 1.1135 (May 3 low).