EUR/USD ticks higher as trade war fears weigh on US Dollar
- The Euro extends its rally for the third consecutive day and reaches weekly highs beyond 1.1550.
- US-China escalating trade tensions and Fed monetary easing hopes are weighing on the US Dollar.
- EUR/USD is testing trendline resistance around 1.1670, with bulls aiming for 1.1730.
EUR/USD is trading higher for the third consecutive day on Thursday and changes hands at one-week highs beyond 1.1650 at the time of writing. Investors' concerns about the escalating trade tensions between the US and China and the lack of progress in the US federal government's shutdown are eroding confidence in the US Dollar.
US President Donald Trump failed to calm markets on Wednesday, affirming in a TV interview that the US is already in a trade war with China, although his Treasury Secretary, Scott Bessent, tried to tone down the White House's rhetoric and said that an extension of the trade truce is still possible.
The Federal Reserve's (Fed) Beige Book, released on Wednesday, echoed Chairman Jerome Powell's comments from the day before and highlighted the slow employment creation as businesses face headwinds from trade tariffs. These conclusions strengthen the case for further interest rate cuts in the coming months and increase pressure on the US Dollar.
In the economic calendar, the Eurozone Trade Balance might provide some fundamental guidance to the Euro before European Central Bank (ECB) President Christine Lagarde's speech. In the US session, the Philadelphia Fed Manufacturing Survey will be one of the few economic indicators released this week, ahead of a string of speeches from Fed policymakers.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.10% | 0.02% | -0.08% | 0.17% | -0.34% | -0.10% | |
| EUR | 0.14% | 0.04% | 0.14% | 0.05% | 0.23% | -0.22% | 0.00% | |
| GBP | 0.10% | -0.04% | 0.16% | 0.02% | 0.16% | -0.26% | -0.01% | |
| JPY | -0.02% | -0.14% | -0.16% | -0.09% | 0.21% | -0.37% | -0.11% | |
| CAD | 0.08% | -0.05% | -0.02% | 0.09% | 0.26% | -0.28% | -0.06% | |
| AUD | -0.17% | -0.23% | -0.16% | -0.21% | -0.26% | -0.44% | -0.35% | |
| NZD | 0.34% | 0.22% | 0.26% | 0.37% | 0.28% | 0.44% | 0.24% | |
| CHF | 0.10% | -0.01% | 0.00% | 0.11% | 0.06% | 0.35% | -0.24% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: Mounting US-China trade tensions keep hurting the US Dollar
- The US Dollar remains on its back foot. Concerns that the escalation of the tensions will take the trade relationships between the world's two major economies to a point of no return are undermining confidence in the US Dollar.
- Investors remain hopeful that next week's meeting between Trump and Chinese Prime Minister Xi Jinping may bring things back to normal, meaning a further extension of the trade truce, which ends on November 1, but the Greenback might remain vulnerable up to that moment.
- On Wednesday, the Federal Reserve assessed that US economic activity remained resilient over the last months, while consumer spending inched down. Employment demand remained muted amid economic uncertainty and higher prices due to rising import costs.
- Eurostat data reported that the Eurozone's Industrial Production contracted at a 1.2% pace in August following a 0.3% increment in July. These figures improve the 1.6% decline forecasted by market analysts and, therefore, the impact on the Euro was minimal.
Technical Analysis: EUR/USD is testing the channel top at 1.1670
EUR/USD's bullish momentum improved on Wednesday as price action breached the neckline of a Double Bottom pattern at 1.1635. This is often a signal of a trend shift, but bulls will need to break the top of the descending channel at the 1.1670 area, which is under pressure at the moment.
The measured target of the Double Bottom pattern is at the October 6 high, near 1.1730. Further up, the next resistance would be the October 1 high, near 1.1780, although that one seems too far a target for this Thursday.
To the downside, the previous resistance, at 1.1630 is likely to act as support ahead of Wednesday's low in the area of 1.1600. A bearish move below these levels would bring the October 9, and 14 lows at 1.1542 back into focus.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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