EUR/USD slips toward 1.16 as Dollar strengthens on easing US-China tensions

• Euro drops as the DXY climbs near 99.00, on geopolitics relief.
• Hopes of US government reopening and renewed trade dialogue lift sentiment for the Dollar.
• ECB's Lagarde and De Guindos speeches in focus as Eurozone data flow remains subdued.

EUR/USD falls during the North American session, edges lower 0.31% as the Greenback remains bid as a sign of relief as US President Trump tempers his rhetoric on China. The pair trades at 1.1599 after reaching a high of 1.1655.

Greenback gains as Trump signals trade talks with Xi and government shutdown optimism builds

The shared currency treads water as the US Dollar Index (DXY), which tracks the buck's value against a basket of six peers, is up 0.37% at 98.95 amid the lack of US economic data as the government shutdown seems poised to extend. Meanwhile, Kevin Hasset, the White House economic advisor, said that the shutdown could end "sometime this week."

The US Senate Minority Leader Schumer said that the Democrat House leader Jeffries and him reached out to Trump on Tuesday to sit down and negotiate, a possible reopening of the government.

Aside from this, the US Dollar was also boosted by news that US President Donald Trump will meet the Chinese President Xi Jinping next week, in an effort to improve trade negotiations ahead of the end of the second 90-day trade truce that will end on November 10.

The US economic docket remains absent for Wednesday and Thursday, but the Bureau of Labor Statistics (BLS) will reveal September's inflation report in the United States. In Europe, traders await speeches by the European Central Bank (ECB) Vice-President Luis De Guindos and the President Christine Lagarde.

Daily market movers: Euro on the defensive as traders wait for fresh catalysts

• Market participants are waiting for the release of US CPI ahead of next week's Federal Reserve monetary policy decision. The US central bank is expected to cut rates 25 basis points to the 3.75% - 4% range, with traders already pricing an additional 0.25% reduction for the December meeting.
• ECB's Chief Economist Philip Lane said that Euro Zone banks may be pressured if US Dollar funding were to dry up amid concerns over Trump's policies. Dollar funding has been on central bankers' minds since Trump announced trade tariffs.
• Next week, the ECB is expected to hold rates unchanged, with odds standing at 98%.
• Meanwhile, the delay of the resolution of the Russia - Ukraine's conflict, could weigh on the Euro, despite Trump's efforts to reach a deal, between Russian President Vladimir Putin and Ukraine's Volodymyr Zelenskyy.

Technical outlook: EUR/USD meanders at around 1.1600, further downside expected

EUR/USD's technical outlook has slightly improved, though the pair remains neutral to bearish as it trades below the 100-day Simple Moving Average (SMA) at 1.1654. The Relative Strength Index (RSI) dipped under the neutral 50 mark last Friday, indicating strengthening downside momentum.

Key support sits at 1.1600, followed by 1.1550 and 1.1500. A decisive break below these levels would expose the August 1 cycle low near 1.1391. On the flip side, resistance is seen at 1.1650 and 1.1700, with a sustained move above the latter paving the way for 1.1800 and the July 1 high at 1.1830.