EURUSD pair resumed the downside move after finishing the week unchanged on Friday. The pair slipped through the 200-DMA and registered ten-day lows marginally above the 1.13 handle which represents the immediate support now.
The euro is under pressure due to a widespread dollar demand after Trump and Xi agreed to resume trade talks. Cease-fire in the US-China trade war means less risks for the economy and thus a lower probability of aggressive rate cuts by the Federal Reserve. By the way, Fed funds futures now point to roughly 15% odds of a 50 bps rate cut in July, which is down from 25% prior to the Trump-Xi meeting.
Against this backdrop, the common currency will likely remain under the selling pressure in the short term but the downside potential looks limited as markets continue to expect a rate cut in the US, while some doubts in a substantial progress towards a deal between the US and China will cap the dollar’s positive performance. Technically, EURUSD needs to hold above 1.13 and get back above the 200-DMA to trim intraday losses.