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• EUR/USD softens to around 1.1415 in Tuesday’s early Asian session.
• Bessent said it’s up to China to de-escalate the trade war.
• Traders raise their bets on the ECB rate reductions. 

The EUR/USD pair edges lower to near 1.1415 during the early Asian session on Tuesday. The Euro (EUR) weakens against the US Dollar (USD) amid rising bets for further rate cuts from the European Central Bank (ECB) in June. Investors brace for further developments in US trade policy ahead of the release of highly anticipated US Nonfarm Payrolls (NFP) data on Friday.  

US President Donald Trump said that there has been progress and he has talked with China’s President Xi Jinping, although Beijing has denied that trade negotiations are taking place. US Treasury Secretary Scott Bessent said that he had interactions with Chinese authorities last week but did not mention tariffs. 

Bessent said on Monday that the US government is in contact with China but that it’s up to Beijing to take the first step in de-escalating the tariff fight with the US due to the imbalance of trade between the two nations. Investors will closely watch the US-China relationship. Trump’s chaotic trade policy has dented faith in American assets, and the shared currency has emerged as an alternative destination for investors’ cash. Any signs of escalation in the US-China trade war could weigh on the Greenback and act as a tailwind for the EUR/USD pair. 

Across the pond, Reuters reported on Saturday that ECB policymakers are becoming increasingly confident about cutting interest rates in June as inflation continues to ease. ECB policymaker Olli Rehn said on Monday that the central bank may cut interest rates below the neutral level that keeps the economy in balance. 

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