The EUR/USD currency pair is approaching the critical level of 1.1600 as the American trading session begins on Tuesday. The US Dollar (USD) exhibits a stronger tone against several currencies, driven by easing trade tensions between the United States and China. This development is providing short-term support to the USD, particularly as the market awaits more significant economic news.
Comments from US President Donald Trump have surprised market participants, as he softened his previously aggressive stance towards China. Trump stated that China has treated the US with “great respect,” expressing optimism that a trade deal would soon be reached. He mentioned that China is likely to engage in negotiations due to the current tariffs. Trump is scheduled to meet with Chinese President Xi Jinping next week during an economic conference in South Korea, further heightening market interest.
The ongoing US government shutdown poses additional uncertainty. With no resolution in sight, the impasse between Democrats and Republicans has resulted in thousands of federal workers being furloughed. The Senate’s failure to pass a funding bill on Monday deepens the crisis, leading to a mixed sentiment in the market.
From a technical perspective, the EUR/USD pair has been on a downward trajectory for three consecutive days. The daily chart indicates that the pair is poised to continue its decline, with immediate support identified at 1.1590. Resistance is noted around 1.1650, which aligns with a flat 100 Simple Moving Average. The bearish sentiment is reinforced as technical indicators maintain a downward trend within negative levels.
The four-hour chart further confirms the bearish outlook for the EUR/USD pair. It shows that the pair is trading below all moving averages, with technical indicators approaching oversold levels. The 20 Simple Moving Average has lost its upward strength and is converging with the bearish 100 Simple Moving Average at approximately 1.1650, suggesting a limited upside potential.
Current support levels for the EUR/USD pair are positioned at 1.1590, 1.1540, and 1.1510. Conversely, resistance levels are seen at 1.1650, 1.1690, and 1.1740. As traders continue to monitor the evolving situation, the outlook for the EUR/USD remains cautious, reflecting the broader uncertainties in both domestic politics and international trade relations.
