EUR/USD reverses losses as optimism abut US China talks fades.

Confidence in the USD fades with US-China talks underway.
Strong Eurozone investors’ Confidence and hawkish comments from ECB officials are supporting the Euro.
The pair remains within recent ranges, with investors awaiting developments from the trade negotiations

EUR/USD has retraced previous losses during Tuesday’s European session, returning above 1.1420 at the time of writing. The pair, however, remains fluctuating within the last few days’ trading range, with investors reluctant to place large directional bets as US and Chinese representatives continue to discuss trade issues.

Positive remarks from some officials, namely US President Donald Trump’s comments affirming that he is getting “good reports” from the meeting, are contributing to keeping market sentiment buoyed and have provided some support to the US Dollar (USD).

Traders, however, are likely to remain looking from the sidelines, awaiting news about concrete progress. The world’s two largest economies have gone into the meeting with a constructive attitude, aiming to revive the spirit of last month’s meeting in Switzerland, which led to a significant reduction in their reciprocal tariffs.

This time, however, thorny issues such as rare earths’ trade, restrictions on chips’ exports, or visas for students will force both parties to make sacrifices if they want to reach a deal. And this might take some time.

In the Eurozone, the Sentix Investors’ Confidence Index has shown a significant improvement in June, with the indicator jumping to positive levels for the first time in one year. Beyond that, ECB’s Olli Rehn and Francoise de Villeroy have reinforced the bank’s recent hawkish stance, and Italian Industrial Output advanced against expectations. All in all, favourable figures for the Euro.