EUR/USD analysis: Bulls at the mercy of USD price dynamics, German/US data eyed for fresh impetus

The EUR/USD pair witnessed a dramatic turnaround on Friday and rallied over 100-pips from three-week lows amid a slump in the US Dollar. The US-China trade tensions escalated further after China announced retaliation tariffs on USD 75B US imports, coupled with the US President Donald Trump's latest Twitter attack on the Fed Chair Jerome Powell prompted some aggressive USD selling during the early North-American session on Friday.

Intensifying US-China trade war weighs heavily on the USD

Meanwhile, an abrupt intensification of trade war fears between the world's two largest economies knocked investors' confidence in the global economy and was evident from a fresh wave of global risk-aversion trade. This was further seen giving the Fed enough reason to ease the monetary policy more aggressively and triggered a fresh leg of a freefall in the US Treasury bond yields, which eventually affected the greenback negatively.
 
This was followed by Trump's announcement to raise existing tariffs on $250 billion worth of Chinese goods to 30% from 25% as of October. Trump further added that the new round of tariffs on $300 billion in goods will be taxed at 15%, up from the current 10% and urged US companies to start looking for an alternative to China.
 
The pair touched a 1-1/2 week high level of 1.1164 during the Asian session on Monday, albeit lacked any strong follow-through as investors now look forward to a fresh batch of US economic data this week for more insights over the impact of intensifying US-China trade war. Monday's US economic docket highlights the release of durable goods orders data, which will be followed by the Conference Board's Consumer Confidence Index on Tuesday and a revised estimate of the second-quarter GDP growth figures on Thursday.
 
Apart from this, the incoming trade-related headlines might continue to influence the broader market risk sentiment and produce some meaningful impetus. From the Euro-zone, the release of German IFO data, scheduled at 08:00 GMT, will also be looked upon to grab some short-term trading opportunities on the first day of a new trading week.

Short-term technical outlook

From a technical perspective, the pair on Friday confirmed a near-term bullish breakthrough a short-term trading range, though the positive momentum faltered near 200-period EMA on the 4-hourly chart. The mentioned handle, around the 1.1165 region, might now act as a key pivotal point for short-term traders, above which the pair is likely to extend the momentum further towards reclaiming the 1.1200 round figure en-route the next major hurdle near 100-day EMA - around the 1.1215-20 region.
 
On the flip side, the mentioned trading range resistance breakpoint - around the 1.1115 region - now seems to protect the immediate downside, below which the pair might slide back below the 1.1100 handle and retest the 1.1075 horizontal support. The pair could then slide further towards challenging the key 1.10 psychological mark in the near-term with some intermediate support near yearly lows - around the 1.1025 zone.