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Euro US Dollar (EUR/USD) Exchange Rate Flat as US-China Optimism Fuels Investors’ Risk Appetite

Euro US Dollar (EUR/USD) Exchange Rate Muted as US-China Trade Optimism Rises

The Euro US Dollar (EUR/USD) exchange rate edged up slightly, and the pairing is currently trading at an inter-bank rate of $1.1308.

Markets welcomed upbeat comments from US Treasury Secretary Steven Mnuchin who suggested that further face-to-face talks between the US and China could be happening very soon.

Mnuchin told reporters in Washington that ‘we’re hopefully getting very close to the final round of these issues.’

This likely saw investors pull out of safe-haven currencies like the USD and EUR.

Commenting on the first few hours of trading on Monday, David Madden Market Analyst at CMC Markets UK said:

‘European equity markets are subdued this morning, on the back of a strong finish on Friday. It seems like investors are taking a breather, and the lack of volatility in Asia overnight prompted some dealers to sit on their hands this morning.

‘Steven Mnuchin, US Treasury Secretary, issued a positive statement about US-China trade talks over the weekend, and he claimed the negotiations are ‘close to the final round’, and that is adding to [the] global feel good factor.’

Euro (EUR) Flat as EU and US to Start Trade Talks

On Monday European Union countries gave final clearance to start formal trade talks with the US, with the months of delay due to French resistance.

The European Commission has said repeatedly that it will not discuss tariffs or barriers to trade in farm products.

However the Trump administration has a wide-ranging list of areas they wish to discuss, including comprehensive agricultural market access.

Head of Research at Kingswood, Rupert Thompson said:

‘Just as frictions with China are diminishing, trade tensions between the US and EU are increasing. Both the US and EU have threatened to impose tariffs on each other in response to past subsidies to Airbus and Boeing. And the US still has to decide whether to go ahead with tariffs on auto imports on national security grounds of all things. Meanwhile, the minutes from the latest Fed meeting confirmed the Fed is very much on pause. With inflation running at close to target and growth slowing but not collapsing, there seems every reason for the Fed to sit on its hands for some time yet.’

Euro US Dollar Outlook: Will the EUR/USD Exchange Rate Rise on Improved German Economic Sentiment?

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

If data reveals that economic sentiment rises from -3.6 to 0.8 in April, the single currency could receive an upswing of support as this would be the first time sentiment has escaped the minuses since March 2018.

Meanwhile, on Tuesday afternoon the US Dollar could rise following the release of March’s industrial production figures.

If industrial production rises by 0.3% after stagnating in February, the Euro US Dollar (EUR/USD) exchange rate may slip.