EUR/USD is trading little changed early Monday, hovering around 1.1665 during the European session after bouncing from the 1.1650 region earlier in the day. The pair is holding steady amid a moderate risk-on mood, supported by signs of easing trade tensions between the United States and China, though upside momentum remains limited.
Market sentiment improved after US President Donald Trump acknowledged on Friday that raising tariffs on China to 100%, as previously threatened, would be “unsustainable.” In addition, US Treasury Secretary Scott Bessent confirmed plans to meet with Chinese Vice Premier He Lifeng this week, suggesting that both sides are seeking to de-escalate trade frictions.
Meanwhile, concerns over regional bank exposure to bad loans in the US—which weighed on sentiment late last week—have eased following stronger-than-expected bank earnings. Solid credit and revenue results from major financial institutions helped restore confidence, putting renewed pressure on the safe-haven US Dollar (USD).
Euro under pressure from weak German data, but sentiment remains supportive
In Europe, fresh data from Destatis showed that Germany’s Producer Price Index (PPI) fell 0.1% month-on-month in September, missing expectations for a 0.1% rise and marking the third consecutive monthly contraction. On an annual basis, producer prices declined 1.7%, extending August’s 2.2% drop, reinforcing concerns about weakening inflationary pressures in the Eurozone’s largest economy.
The economic calendar for the region remains light on Monday, with speeches from European Central Bank (ECB) policymakers Isabel Schnabel and Joachim Nagel likely to draw attention for any policy cues. Across the Atlantic, the absence of key US economic releases amid a government data blackout is expected to keep volatility subdued.
From a global perspective, stronger-than-expected Chinese macro data released earlier today also helped bolster market sentiment. China’s Q3 GDP expanded 1.1% quarter-on-quarter, beating forecasts of 0.8%, while industrial production rose 6.5% year-on-year and retail sales increased 3.0%, both exceeding estimates. The upbeat data supported risk-sensitive currencies such as the Australian Dollar (AUD) and New Zealand Dollar (NZD) while weighing slightly on the US Dollar.
Technical outlook: EUR/USD tests key support near 1.1650
From a technical standpoint, EUR/USD has tested the broken trendline support near 1.1650, which continues to act as a floor for now. The pair previously reached the 1.1730 target from the Double Bottom pattern last week before pulling lower.
The 4-hour Relative Strength Index (RSI) is hovering around the 50 level, reflecting indecision and a lack of clear directional bias. A sustained break below 1.1650—a zone that capped bullish attempts on October 9 and 15—could hand control back to sellers, exposing the October 15 low near 1.1600 and the October 14 trough at 1.1545.
On the upside, initial resistance is seen at 1.1675, followed by last Friday’s high near 1.1730. A bullish breakout above that level could open the door for a retest of the October 1 high around 1.1775.
