The EUR/USD currency pair is approaching the critical level of 1.1600 during the early American trading session on Tuesday. The US Dollar exhibits a stronger tone across the foreign exchange market, primarily due to easing trade tensions between the United States and China. This development supports the Greenback, particularly as the US government remains in a state of shutdown, exacerbating the funding crisis.
US President Donald Trump surprised market observers with a shift in his rhetoric regarding China. He described the Asian nation as having treated the US with “great respect” and expressed optimism that a deal could be reached, suggesting that tariffs would encourage China to negotiate. Trump is scheduled to meet with Chinese President Xi Jinping next week at an economic conference in South Korea, further highlighting the evolving diplomatic landscape.
Despite these developments, the ongoing government shutdown has significant implications. With no resolution in sight, thousands of federal workers are furloughed, and the political stalemate between Democrats and Republicans continues. On Monday, the Senate’s failure to pass a funding bill deepened the crisis, casting a shadow over the economic outlook.
The macroeconomic calendar for the day lacks any significant data releases, keeping traders focused on the geopolitical tensions and their impact on currency movements.
Technical Analysis of EUR/USD
From a technical perspective, the daily chart indicates that the EUR/USD pair has declined for three consecutive days, suggesting a bearish trend. Immediate support is identified at 1.1590, with further support levels at 1.1540 and 1.1510. Resistance levels are noted at 1.1650, 1.1690, and 1.1740.
The 100 Simple Moving Average is currently flat around 1.1650, while a bearish 20 SMA hovers just above it. This technical analysis indicates that sellers are maintaining control, limiting any potential upward movement in the near term.
In the short-term view, the 4-hour chart underscores a firm bearish sentiment. Technical indicators are trending downwards, approaching oversold levels, as the pair continues its slide below all moving averages. The 20 SMA has lost its upward momentum, converging with a mildly bearish 100 SMA, reinforcing the resistance area around 1.1650.
As the market reacts to these evolving factors, traders will be closely monitoring both geopolitical developments and technical indicators to navigate the shifting landscape of the EUR/USD pair. The ongoing US-China discussions and the internal challenges of the US government are likely to play pivotal roles in determining the direction of this currency pair in the coming days.
