EUR/USD extends losses, steadies near 1.1100

The EUR/USD pair advanced to its highest level in more than ten days at 1.1166 during the early trading hours of the Asian session but failed to preserve its bullish momentum. With the Greenback erasing the losses it suffered on Friday following news of China imposing retaliatory tariffs and the Trump administration hiking the tariff rate as a response, the pair turned south in the second half of the day and tested the 1.11 handle in the last hour. As of writing, the pair was down 0.35% on a daily basis at 1.1105.

USD rebounds on latest trade war headlines

According to Reuters, China's Vice Premier Liu He, who has been leading the trade negotiations with the US, on Monday said that China was willing to resolve the dispute through "calm" negotiations. Responding to these comments, US President Donald Trump said that he was confident that China was sincere about wanting a trade deal and allowed the 10-year US Treasury bond to rebound from the three-year lows it set earlier in the day.

Touching on the trade dispute with Europe at the G7 press conference, Trump said it was likely for his administration to reach a trade deal with the EU without imposing tariffs on European car imports.

Meanwhile, the only data from the US today revealed that new orders for manufactured goods in July increased by 2.1% to beat the market expectation of 1.1% and provided an additional boost to the Greenback. The US Dollar Index is now looking to close the day above the 98 handle, adding 0.8% on a daily basis.

On the other hand, the shared currency seems to be having a tough time finding demand as markets are trying to figure out how the European Central Bank (ECB) will react to the latest batch of disappointing data and the heightened geopolitical tensions. ECB Council member and Slovak central bank chief Peter Kazimi on Monday noted that he was leaning toward a 'policy action' in September. 

Technical levels to watch for