EUR/USD revisits 100-day SMA support amid deepening US-China tensions

EUR/USD has fallen back below a major moving average support.
The dollar is better bid across the board on the back of escalating US-China tensions.
The EU common fund proposal and signs of a turnaround in the German economy could restrict losses in the EUR.

Omkar Godbole FXStreet Contributor

EUR/USD is facing selling pressure and is currently trading below the 100-day simple moving average (SMA) support at 1.0966.

The American dollar looks to be drawing haven bids, courtesy of the escalating tensions between the US and China.

President Trump ramped up his attack on China late Thursday by accusing the dragon nation of running a massive disinformation campaign and allowing the coronavirus to spread across the globe. Further, the White House issued a 20-page report to Congress, criticizing China's economic and military policies.

Tensions between the world's biggest economies could keep the risk sentiment under pressure and the safe-haven dollar better bid during the European trading hours. However, optimism stemming from the recently announced European Union (EU) common fund proposal may restrict losses in EUR/USD.

According to Reuters News, France and Germany have proposed a 500 billion euro ($543 billion) Recovery Fund to offer and sectors hit hardest by the coronavirus pandemic.

That, coupled with the recently released German survey data, which showed a bigger-than-expected rise in the inventor sentiment, pushed EUR/USD higher from 1.0919 to 1.10 on Wednesday.

From a technical analysis standpoint, the bias remains neutral with the pair still stuck in the four-week-long trading range of 1.10 to 1.0750.

Technical levels

1. R3 1.1093
2. R2 1.1046
3. R1 1.1012
PP 1.0966
1. S1 1.0932
2. S2 1.0886
3. S3 1.0852

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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