EUR/USD: Downside risks grow on fears of US-China trade talks falling apart
|- EUR/USD closed below key rising trendline on Thursday.
- Investors may sell risk in Europe on fears the US-China trade talks are falling apart.
EUR/USD is on the back foot, having breached key ascending trendline support on Thursday and risks falling to levels below 1.1150 as risky assets are taking a hit on reports stating that China is no longer interested in trade talks with the US.
The shared currency fell from 1.1220 to 1.1166 and closed below the trendline connecting April 26 and May 3 lows on Thursday, as the 10-year treasury yield rose from 2.36% to 2.41% on the back of strong US data and the chance of a Fed rate cut by December, implied by Fed fund futures, fell from 130% to 120%.
Technicals, therefore, are biased bearish. Further, risk assets may take a hit in Europe, adding to the bearish pressures around the EUR on fears the US-China trade negotiations are falling apart.
Xinhua News Agency reported in Asia that China feels Trump’s approach to trade talks lacks sincerity and there is no point in continuing discussions.
Apart from broader market sentiment, the pair may take cues from the final Eurozone inflation reading for April.
Pivot points
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