The US-China trade war reached new heights on Friday. Currencies and equities ended the week with major losses after China hit the US with tariffs on $75B worth of US goods.

No one is buying euros because they are worried about the political situation in Italy, the possibility of a recession in Germany, the prospect of aggressive easing from the European Central Bank and the ongoing risk of more tariffs from the US.

The next 48 hours will be very important for EUR/USD because the currency pair has been confined in a narrow 60 pip trading range for most of the week.

Investors are dipping their toes back into US assets. Stocks traded higher for the third day in a row, Treasury yields rebounded off their lows and the greenback started the week stronger against all of the major currencies.

It has been a great week for the US dollar which recovered against all of the major currencies with the exception of sterling, which coasted on stronger UK data.

The most important piece of US data scheduled for release this week was retail sales and even though consumer spending doubled expectations, investors shrugged off the news.