The EURUSD pair is trading with minor losses on Tuesday, consolidating most of the gains of the previous two trading days, as investors await news about the trade negotiations between the European Union and US.
The Euro is trading at 1.1685, slightly lower on the daily chart, but 1% above last week’s low of 1.1555. The pair has also broken the top of a bearish channel from July 1 highs, which suggests that further appreciation is likely.
EURUSD drew support from a somewhat softer dollar and lower US Treasury yields on Monday to extend Friday’s recovery, but has stalled below 1.1700 as investors’ appetite for risks waned. Trade uncertainty continues to weigh on sentiment as the August 1 tariff deadline approaches without significant progress in the negotiations.
EU and US representatives keep negotiating in an attempt to reach a deal, but hopes of a successful outcome diminish by the day.
Recent comments from the European side reflect that confidence in a deal is waning and the bloc is exploring retaliatory measures. Some countries are considering wide-ranging anti-coercion measures targeting US services as a response to the hefty unilateral levies announced by President Trump.
Later in the day, Federal Reserve Chairman Jerome Powell’s speech in Washington will grab some attention.
The Fed chair is not expected to comment on monetary policy as the Fed is within its blackout period ahead of the interest-rate decision on July 30. But his reaction to the unprecedented pressures from the Trump administration might have some impact on the market, eroding the independence of the US central bank and the dollar’s status as reserve currency.
Also on Tuesday, the European Central Bank will release its Bank Lending Survey, providing some insight about the financial conditions in the Euro area.
On Monday, an ECB survey on access to finances showed that European firms are positive about their growth outlook, yet wary about the potential impact of trade tensions, boosting the Euro.
Investors will also await quarterly earnings of tech giants Alphabet and Tesla, while in Europe, the results of SAP, the region’s largest software maker, will provide some clues about the impact of a strong currency on European companies’ revenue.
EURUSD price charts by TradingView
(Source: OANDA)
