EUR/USD rises as US-China trade war eases ahead of Fed decision

• EUR/USD trades at 1.1643, supported by improved risk sentiment after US-China talks in Malaysia.
• Negotiators outlined a framework for a trade truce covering tariffs, rare earths, and fentanyl.
• US Dollar softens as traders price in 97% odds of a 25 bps Fed rate cut at this week's meeting.

EUR/USD edges up late in the North American session on Monday as the Greenback retreats from last week's highs, while the US-China trade war de-escalates ahead of the Donald Trump-Xi Jinping summit in South Korea. The pair trades at 1.1643, up by 0.15%.

Euro climbs as Dollar retreats from weekly highs; focus turns to Trump-Xi summit and FOMC

Negotiations in Malaysia between US and Chinese officials set the stage for the Trump-Xi Jinping meeting on Thursday, after trade negotiators talked about tariffs, shipping fees, fentanyl and export controls on rare earths.

Risk appetite improved on the news, a tailwind for the shared currency, which had been pressured as the US Dollar regained strength. Despite this, the EUR/USD remains at familiar levels as traders wait for the Federal Reserve's (Fed) monetary policy decision in the next two days.

Traders' expectations that the Federal Reserve will cut rates by 25 basis points at the next meeting are at 97%, as revealed by the Prime Market Terminal Interest rate probability tool.

Source: Prime Market Terminal

Data in the Eurozone revealed that companies expect an economic improvement next year, but the current situation ix "assessed as slightly worse," revealed the IFO Business Survey.

Daily market movers: EUR/USD floats around 1.1640 as the Greenback weakens

• The US Dollar Index (DXY), which tracks the performance of the buck's value against a basket of its rivals, is up 0.03% at 98.94, capping the EUR/USD's advance.
• US President Donald Trump arrived in Asia and said that the US and China are set to "come away" with a trade deal. He is expected to meet his counterpart Xi Jinping this week in South Korea.
• US Treasury Secretary Scott Bessent said on Sunday that US and Chinese officials have reached a "positive framework" for the upcoming Trump-Xi summit later this week. He also suggested that President Trump's threat to impose 100% tariffs on Chinese goods is no longer under consideration.
• The German Ifo Business Climate Index in October rose from 87.7 to 88.4, exceeding forecasts of 87.8. Expectations advanced to 91.6 from the previous 89.8, while Current Conditions fell to 85.3 from 85.7, beneath projections for a dip to 85.5. The survey revealed that "Companies remain hopeful that the economy will pick up in the coming year. However, the current business situation was assessed as slightly worse."

Technical outlook: EUR/USD remains subdued, traders eye 100-day SMA

The EUR/USD technical picture shows that further upside could be capped by key resistance levels lying overhead. First, traders must clear the 100-day Simple Moving Average (SMA) at 1.1659, followed by the 50-day SMA at 1.1686. A breach of the latter will expose the 1.1700 milestone.

Immediate support is located at 1.1600, followed by 1.1550 and 1.1500. A decisive break below this area would expose the August 1 cycle low near 1.1391.