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  • Rally in USD/CNY on trade woes helps keep the USD broadly supported.
  • Technical set up points to bullish bias,
  • Focus remains on US-China trade developments amid lack of macro news.

The EUR/USD pair continues to fluctuate between gains and losses above the 1.12 handle so far this Monday. However, the upside remains capped by the 1.1250 barrier, leaving the rates consolidating in a 15-pips narrow range.

The spot stands resilient to the wide-spread risk-aversion induced by escalating US-China trade tensions after last week’s talks ended in a stale-mate, with the US President Trump continuing to tweet, threatening further tariff hikes on the remaining of the USD 325 billion worth of the Chinese imports. Meanwhile, the Chinese have also vowed retaliation to the US tariffs, adding that they won’t yield to the foreign pressure.

More so, the spot also finds support from the technical picture that has turned in favor of the bulls on the 4’hour chart, especially after EUR/USD  surpassed the 100 Simple Moving Average.  

However, the bulls continue to struggle to take on the upside, as the looming US-China trade risks continue to weigh heavily on the Chinese Yuan. The ongoing upsurge in the USD/CNY cross continue to keep the US dollar broadly underpinned, which in turn keeps a check on upside in the EUR/USD.

Further, the latest headlines on the US-EU May 18th tariffs deadline and the EU’s willingness to retaliate to the US tariffs also temper the tone around the shared currency.

Looking ahead, the risk sentiment driven by the US-China trade-related headlines will continue to influence the EUR/USD price-action amid a data-empty economic calendar today. Also, in focus remains the speech by the Fed Vice-President Clarida for fresh hints on the US economic and interest rates outlook.

EUR/USD Technical Levels

“Initial resistance awaits around 1.1250 which was the high point on Friday. Next up, 1.1265 is the highest level recorded so far in May, and also a peak in late April. It is followed closely by 1.1280 that provided support in mid-April.

Support awaits at 1.1220 which temporarily capped EUR/USD last week. 1.1176 was the previous low of 2019, and May’s low follows it at 1.1135. The current 2019 trough of 1.1110 is the next line to watch,” FXStreet’s Senior Analyst, Yohay Elam notes.