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• EUR/USD softens to around 1.1380 in Friday’s early Asian session.
• Trump said the US was negotiating with China on trade after Beijing’s denial. 
• Traders have become increasingly confident that the ECB will cut interest rates in the June meeting. 

The EUR/USD pair weakens to near 1.1380 during the early Asian session on Friday. However, the downside for the major pair might be limited as investors remain concerned about the US-China trade tensions. Later on Friday, the final reading of Michigan Consumer Sentiment will be released. 

US President Donald Trump said late Thursday that his administration was talking with China on trade. Meanwhile, China said that no negotiations had been held on the economy and trade, and it urged the US to lift all unilateral tariff measures if it really wished to resolve the issue. Persistent concerns over potential tariff threats by Trump and persistent trade tensions are likely to weigh on the Greenback and act as a tailwind for EUR/USD in the near term.

"It seems like there's a gulf as wide as the Pacific Ocean between how the U.S. and China are viewing trade," said Matt Weller, head of market research at StoneX. "And I think as long as that gulf remains, the rallies in the dollar might be short-lived.”

Across the pond, traders raise their bets that the European Central Bank (ECB) will cut interest rates in the June policy meeting due to the dovish remarks from the ECB policymakers. This, in turn, undermines the shared currency against the USD. 

ECB policymaker and Finnish central bank governor Olli Rehn said on Thursday that the central bank should not rule out a "larger interest rate cut". Meanwhile, ECB Governing Council member Madis Muller said on Wednesday that the central bank may have to lower interest rates to levels that stimulate the economy if trade uncertainty proves more damaging to growth.  

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