Trade War: No Respite for EURUSD as US-China Trade Talks Resume
What's on this page
Trade talking points:
- The potential for a trade war continues to be a major influence on the FX markets as US-China trade talks resume in Washington.
- So far, that has done little to help EURUSD, which could well extend its recent losses.
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And for a longer-term outlook take a look at our Q2 forecast for EUR.
Trade talks in focus as US and China meet
The potential for a trade war continues to overshadow the foreign exchange markets as US-China trade talks resume in Washington. They are expected to be tough and so far EURUSD remains under pressure and could well extend its recent losses.
EURUSD Price Chart, Daily Timeframe (Year to Date)
Trade wars aside, the USD continues to benefit from its interest-rate advantage over German Bunds, the benchmark for Euro-Zone bonds, with the yield on the 10-year US Treasury note reaching a seven-year high above 3.1% before easing back a tad.
On the other side of the coin, Italian politics continue to be negative for the Euro, as does the relative weakness of the Euro-Zone economy. This all suggests further downside for EURUSD, although there is one warning signal on the chart above: the 14-day relative strength index, or RSI, is back below the 30 level that suggests the pair has been oversold.
Further reading on trade wars
At DailyFX we have published several articles on the subject that you might find useful. These include:
The Impact of Tariffs and Trade Wars on the US Economy and the Dollar
A War to Trade More, Not Less - What’s Behind US-China Tariffs
Why International Trade News Matters for Foreign Exchange Rates
US China Trade War & a Brief History of Trade Wars – 1900 until Present
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--- Written by Martin Essex, Analyst and Editor
Feel free to contact me via the comments section below, via email at email@example.com or on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.