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Euro US Dollar (EUR/USD) Exchange Rate Muted as US-China Trade Talks Set to Resume

Euro US Dollar (EUR/USD) Exchange Rate Flat as Little Change since US-China Deal Collapsed

On Tuesday, the Euro US Dollar (EUR/USD) exchange rate remained flat.

The pairing is currently trading at an inter-bank rate of $1.1200.

The United States and China are set to resume trade talks this week following May’s breakdown in discussions.

However, a year after trade tensions began there is little sign that the differences between the two sides have narrowed.

Moreover, sources familiar with the talks said the G20 summit did little to clear the path for negotiators to resolve the current impasse.

Commenting on the summit, Derek Scissors, a China expert at the American Enterprise Institute said both sides got what they wanted – a lowering of the temperature and an avoidance of further tariffs.

An anonymous Chinese official stated that talks were set to continue very quickly.

However there is a ‘fairly large gap’ in the core demands from each side.

Added to this, tensions have increased as the source revealed that the ‘negotiating environment is even more severe.’

Euro (EUR) Muted as German Recession Seems ‘Unavoidable’

On Monday, data showed that Eurozone investor confidence slumped further than forecast in July.

The Sentix investor confidence index slumped to -5.8 in July from the previous month’s reading of -3.3.

This was the lowest reading since November 2014, leaving Euro sentiment dampened.

Further disappointment hit the single currency as the sub-index for Germany plummeted to -4.8 from -0.7.

This was the lowest in almost a decade, and discussing the bloc’s largest economy, Sentix Director Patrick Hussy said:

‘The high dependence on exports and the Chinese sales market is increasingly becoming a burden and the trade dispute hangs like a sword of Damocles over the one-time poster boy of the Euro region.

‘A recession looks unavoidable.’

Euro US Dollar Outlook: Will a Dovish Fed Cause USD to Slide?

Looking ahead to this afternoon, the US Dollar (USD) could edge up against the Euro (EUR) following a speech from the Fed’s Chair Jerome Powell.

If Powell reins back market expectations of a Federal Reserve rate cut, it could provide an upswing of support for the ‘Greenback’.

Meanwhile, on Wednesday the US Dollar could remain under pressure ahead of the Fed’s FOMC minutes.

If the minutes reveal that the Fed are still considering an interest rate cut in 2019 despite last week’s strong jobs data, the Euro US Dollar (EUR/USD) exchange rate could rise.