EUR/USD Price Eyes $1.1481 as China Tariffs, ECB Bets Shake Markets
Fresh optimism swept through markets after China announced a surprise exemption for select U.S. imports from its 125% tariffs.
Quick overview
- China announced a surprise exemption for select U.S. imports from its 125% tariffs, sparking optimism in the markets.
- Despite initial positive sentiment, a Chinese spokesperson denied any active negotiations, insisting that all U.S. tariffs must be lifted first.
- The European Central Bank is facing pressure due to rising expectations of a dovish policy amid concerns over Eurozone inflation.
- EUR/USD is currently in a consolidation phase, with potential breakout levels identified for traders.
Fresh optimism swept through markets after China announced a surprise exemption for select U.S. imports from its 125% tariffs. That news—confirmed by business sources on Friday—gave investors hope that the drawn out U.S.-China trade war might finally be losing steam. U.S. Agriculture Secretary Brooke Rollins poured more fuel on that fire over the weekend, telling Reuters that tariff talks were ongoing-and very close to yielding new agreements with other countries.
But China quickly doused that optimism. A spokesperson from the Chinese embassy in Washington said there were no active negotiations, urging the U.S. to “stop creating confusion.” Beijing officials stressed that all U.S. tariff measures must be lifted before any formal talks can proceed. Despite the mixed messaging, traders saw China’s exemptions as a step towards de-escalation—and that’s why they’re favoring risk assets like the euro.
Key developments:
China eases tariffs on select U.S. imports
U.S. officials hint at daily trade talks
Beijing denies active negotiations underway
ECB Dovish Shift Builds Pressure on the Euro
While global risk appetite has improved, the euro has its own internal pressures. Market expectations for a dovish European Central Bank (ECB) are rising fast, largely due to fears that Eurozone inflation could miss the bank’s 2% target.
Last week, Finnish central bank governor and ECB policymaker Olli Rehn warned about increasing downside risks. He said medium term inflation forecasts may fall well below expectations under current conditions. If inflation weakens further, investors expect the ECB to keep or even expand its accommodative stance—a dynamic that could weigh on the euro in the long term.
Highlights:
ECB policymakers hint at softer inflation outlook
Market anticipates extended dovish policy
Euro faces tug-of-war between risk appetite and rate expectations
EUR/USD Chart Eyes Symmetrical Breakout
EUR/USD is trading at $1.1364, squeezed inside a tight symmetrical triangle after bouncing off $1.1312 support. The 50-hour EMA ($1.1363) is right at current levels, a pivot point for the next move.
For beginners this is a “consolidation squeeze” — a market standoff that usually ends with a big move. A daily close above $1.1397 could trigger a rally to $1.1439 and then $1.1481. Below $1.1350 could see a drop to $1.1312 or lower.
Trade Setup:
Buy breakout: Above $1.1397
Upside targets: $1.1439 and $1.1481
Support to watch: $1.1350
Stop-loss: Below $1.1312
Be patient. Wait for a daily close above $1.1397 before chasing. False breakouts are common when triangles get too tight with no volume confirmation.
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