The greenback started the week on the defensive as part of a marginal profit taking after a rally on Friday fuelled by strong US economic data. Despite the upside impetus has abated, the buck stays afloat as investors anticipate another escalation of the US-China trade war which could trigger another sell0off in the riskier assets.
US is reported to impose tariffs on $200 billion of Chinese imports in the first half of the week, but at a rate of 10% instead of 25% signaled earlier, which partly explains the limited buying pressure on the USD and a relatively timid risk aversion at the start of a new trading week.
Nevertheless, as the talks between the two countries are at a risk, and fresh mutual tariffs are looming, the dollar may yet receive a decent support from this front down the road as the conflict is far from being resolved. Additionally, the Fed is expected to raise rates later this month, which is another bullish factor for the greenback.
As such, EURUSD could resume the decline after a potential rebound above 1.17. In the coming days, the pair could easily lose the 1.16 figure should the trade tensions escalate further.
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