The U.S. dollar resumed its upward trajectory, while several risk assets dropped sharply after U.S. President Donald Trump stated that he expects the upcoming trade talks with China, scheduled for this weekend, to yield significant progress. He predicted that Beijing would be ready to make concessions and added that he might consider lowering tariffs on China if there is substantial progress in the negotiations.
These comments came amid growing concerns about a slowdown in global economic growth, fueled in part by the trade war between the world's two largest economies. Investors and analysts will be watching every step of the negotiations closely, hoping for a swift resolution that could stabilize markets and restore confidence in the outlook for global growth.
"I think it will be substantial," Trump told reporters while announcing a framework trade agreement with the United Kingdom.
It's worth recalling that Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are scheduled to meet with Chinese Vice Premier He Lifeng in Switzerland this weekend to discuss trade. Trump noted that if the talks are successful, he could consider reducing the 145% tariff he imposed on many Chinese goods. "It could happen," Trump said in response to a question. "I mean, anything's possible. I think we're going to have a very good relationship."
Markets rallied on Thursday amid optimism surrounding the negotiations with China, and the U.S. dollar continued to strengthen following the Federal Reserve's decision on Wednesday to leave interest rates unchanged.
Nevertheless, many analysts expect that negotiations over reducing punitive tariffs for both countries will be difficult. So, despite Trump's optimistic tone, cautious optimism remains warranted. Deep, persistent disagreements over key issues such as intellectual property protection, market access, and state subsidies remain serious obstacles to even a preliminary agreement. Previous rounds of talks have failed to deliver substantial results, and there is a risk that both sides may once again fail to reach a compromise.
Still, the mere fact that negotiations are resuming gives hope that both parties recognize the need to find a solution. The potential tariff reduction Trump mentioned could be an important step toward de-escalating tensions and creating a more constructive atmosphere for further dialogue. However, the success of the talks will ultimately depend on the willingness of both sides to make mutual concessions and seek compromises that serve the interests of both the U.S. and China.
EUR/USD Technical Outlook
EUR/USD buyers now need to focus on reclaiming the 1.1260 level. Only then will a test of 1.1310 become viable. From there, a move to 1.1370 is possible, although doing so without support from major players will be quite challenging. The ultimate target would be the 1.1400 high. If the pair declines, significant buyer interest is expected only around 1.1205. If no support emerges there, it would be better to wait for a retest of the 1.1150 low or consider opening long positions from 1.1097.
GBP/USD Technical Outlook
GBP/USD buyers need to break above the nearest resistance at 1.3250 to target 1.3285, which will be difficult to breach. The final target lies in the 1.3310 level. If the pair drops, bears will attempt to regain control at 1.3212. A successful breakdown of this range would deal a serious blow to the bulls' positions and push GBP/USD to the 1.3170 low, with the potential for an extended move down to 1.3125.
