EUR/USD Eases Gains as US Dollar Strengthens on Improved US-China Trade Relations

EUR/USD Eases Gains as US Dollar Strengthens Amid Improved US-China Trade Relations

EUR/USD has retraced some of its earlier gains, as the US Dollar recovers following positive developments in US-China trade relations. The Chinese government has rolled back non-tariff barriers on 45 US companies, signaling a de-escalation in trade tensions between the two nations. This move comes after a 90-day truce that resulted in the reduction of tariffs by 115%, allowing both sides to ease some of the economic pressures caused by the trade war.

Adding to the optimism, US Treasury Secretary Scott Bessent indicated that Washington is entering into a series of negotiations with China to avoid further escalation of trade disputes. These talks have raised hopes among investors that the US and China may soon finalize a comprehensive trade agreement, which could boost global economic growth.

While the EUR/USD pair remains up by 0.2%, it is facing some selling pressure as the US Dollar regains strength. The US Dollar Index (DXY), which tracks the Greenback's performance against six major currencies, has climbed back to 100.85, recovering from an intraday low of 100.60. This recovery in the US Dollar comes as traders react to the improved trade climate and the potential for a global economic rebound.

Despite these positive signs for the US Dollar, the European Union is prepared with countermeasures in case the trade talks between the US and China do not progress as expected. This continued uncertainty over trade relations has contributed to the volatility in the EUR/USD pair, leaving it vulnerable to fluctuations as both sides negotiate.