EUR/USD Steady As US Dollar Demand Picks Up
EUR/USD is trading cautiously near this month’s low around 1.1100 during European trading hours on Tuesday (05/13). The major currency pair is struggling to gain ground as the US dollar (USD) outlook strengthens after the United States (US) and China agreed to avoid escalation in the trade war and substantially reduce tariffs on Monday.
At the time of writing, the US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, is holding on to the previous day’s gains around 101.60.
On Monday, Washington and Beijing lowered tariffs by 115% for 90 days after a two-day meeting in Geneva over the weekend, resulting in the additional levies being reduced to 10% on the US and 30% on China. The 20% fentanyl levies on China remain intact, while Washington has assured that there have been “constructive discussions” to resolve them.
The announcement of the temporary truce resulted in a sharp rise in the US dollar and a rally in US equity indices, indicating that investors have regained confidence in the US economic outlook. The imposition of much higher reciprocal tariffs by the US on China led to a substantial decline in the US dollar and demand for US assets. Market experts and Federal Reserve (Fed) officials painted a bleak picture of the US economy after the US-China trade war.
Source: FXStreet
