EUR/USD: Risk-on could pave way for a move above key hurdle of 1.1402

• US-China trade truce has put a bid under the equities.
• Trump’s tweet stating China to drop auto tariffs could further boost risk appetite.
• Risk-on could bode well for the EUR. Technically speaking, 1.1402 is the level to bet for the bulls.

The EUR/USD was mildly bid in Asia and could soon scale the key resistance at 1.1402 if the Chinese yuan (CNY) and the equities continue to cheer the US-China trade truce.

Over the weekend, the US President Donald Trump and his Chinese counterpart Xi Jinping agreed to pause the trade war for 90 days as expected.

The risk assets responded positively in Asia. This S&P 500 futures rose 1.5 percent and the Shanghai Composite index gapped higher to report 3 percent gains. Elsewhere, oil benchmarks rose more than 4 percent.

In the FX markets, the AUD and NZD gapped higher. The EUR/USD also picked up a bid, but gains were capped around 1.1350, possibly due to dip demand in the USD/CNY pair.

The US dollar, however, could take a beating in Europe, if the USD/CNY takes out the Asian session low of 6.9148 and the European equities report solid gains. In that case, the EUR/USD could rise towards the key obstacle of 1.1402.

President Trump tweeted earlier today that China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%. As a result, CNY and stocks could continue to rise in Europe.

In the US session, the focus would shift to US ISM manufacturing PMI release.

EUR/USD Technical Levels