EUR/USD Struggles Amid Signals From Germany

The common currency came under the selling pressure following a short-lived rally witnessed on Friday, when the greenback was on the defensive. At the start of a new trading week, EUR/USD resumed the decline and threatens the 1.11 handle once again.

The dollar safe-haven demand has intensified after another portion of tariff threats between the US and China. However, the pressure has eased somehow after Trump said China had contacted Washington to say it wanted to return to the negotiating table. In general, tensions on the trade front remain high and cap the upside momentum in high-yielding assets including the euro.

The additional bearish pressure comes from German economic data, pointing to a rising threat of a technical recession. In particular, the headline German IFO business climate index came in at 94.3 in August, weaker than 95.7 in July and missing the consensus estimates of 95.1. Expectations Index came in at 91.3, down from previous month’s 92.2 reading.

In the short-term, as risk-off sentiment prevails in the global markets, the potential upside attempts in the EUR/USD pair will be limited and capped by stronger dollar. The US Commerce Department releases data on durable goods orders later today, with the release could lift the pair should the numbers disappoint.

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