EUR/USD remains depressed below mid-1.1700s amid trade concerns, stronger USD
EUR/USD trades with a mild negative bias amid some follow-through USD buying.
Trade-related uncertainties weigh on the Euro and also contribute to the downtick.
The mixed fundamental backdrop warrants caution for aggressive bearish traders.
The EUR/USD pair ticks lower for the second consecutive day on Friday and moves away from a nearly three-week top touched the previous day. Spot prices, however, lack follow-through selling and currently trade around the 1.1740 region, down less than 0.10% for the day.
Despite the European Central Bank's (ECB) on-hold rate decision on Thursday, the shared currency, so far, has been struggling to attract any meaningful buyers amid persistent trade-related uncertainties. White House spokesman Kush Desai said that any talk about a deal between the US and the European Union (EU) should be seen as speculation unless it is confirmed by President Donald Trump. This overshadows media reports that the EU-US trade agreement is nearing completion, which, in turn, is seen undermining the Euro and weighing on the EUR/USD pair.
The US Dollar (USD), on the other hand, is gaining positive traction for the second straight day as the US macro data released on Thursday reaffirmed the view that the Federal Reserve (Fed) will hold interest rates at the July 30 meeting. The US Initial Jobless Claims fell to 217K last week, or the lowest reading since mid-April, while the S&P Global's US Composite PMI pointed to continuous expansion in the business activity for the 30th straight month. This might further force the Fed to maintain the status quo, which benefits the USD and undermines the EUR/USD pair.
Meanwhile, Trump dialed up the pressure on Fed Chair Jerome Powell to lower borrowing costs during a rare presidential visit to the central bank's headquarters. Adding to this, fears that the central bank's independence could be under threat on the back of mounting political interference might hold back the USD bulls from placing aggressive bets. Furthermore, the upbeat market mood might continue to cap any further USD appreciation and offer some support to the EUR/USD pair, warranting some caution before confirming that spot prices have topped out.
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