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Euro US Dollar (EUR/USD) Exchange Rate Flat as Risk-Appetite remains Fragile as China Vows to ‘Never Surrender’

Euro and US Dollar bank notes and coins.

Euro US Dollar (EUR/USD) Exchange Rate Remains Muted as Markets ‘Wait and See’

The Euro US Dollar (EUR/USD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of $1.1236.

In the absence of notable economic data releases, the focus has remained on the heightened trade tensions between the US and China.

This morning, speaking to reporters in Beijing, Foreign Ministry Spokesman Geng Shuang said:

‘China will never surrender to external pressure. We have the confidence and ability to protect out lawful and legitimate rights.’

However, it is not clear how China will respond to US President Donald Trump’s tariff hikes.

The Foreign Ministry Spokesman added:

‘As for the details, please continue to pay attention. Copying a US expression – wait and see.’

Both Chinese state television and the People’s Daily Newspaper reiterated the ‘never surrender’ message.

The increased tensions between the US and China likely caused an upswing in support for safe-haven currencies such as the US Dollar and Euro.

US-China Tensions Increase as Trump Warns China not to Respond

On Friday, the US slapped $200 billion worth of Chinese goods with 25% tariffs which sparked further US-China trade tensions.

While it is expected that China will respond, on Monday US President Donald Trump warned against this.

In a Tweet, the President wrote:

‘There will be nobody left in China to do business with. Very bad for China, very good for USA! But China has taken so advantage of the US for so many years, that they are way ahead (Our Presidents did not do the job). Therefore, China should not retaliate – will only get worse!’

Euro US Dollar Outlook: Will a Rise in German Economic Sentiment Buoy the Euro?

Looking ahead to the start of Tuesday’s session, the Euro (EUR) could rise against the US Dollar (USD) following the release of the German ZEW economic sentiment survey.

If economic sentiment in the Eurozone’s largest economy rises higher than forecast, the single currency could receive an upswing of support.

Meanwhile, the US Dollar could slide against the Euro following the release of the US retail sales data on Wednesday.

If retail sales do not rise as high as forecast in April, the Euro US Dollar (EUR/USD) exchange rate could rise.