The greenback is lower against its major counterparts on Monday, as positive risk sentiment amid renewed trade optimism caps the safe-haven demand for the US currency. Over the weekend, China and US officials held phone talks and discussed the final details of the first phase of a trade deal. The news fueled investor optimism at the start of the trading week but lack of details and the remaining issue of tariffs removal cap the positive sentiment.
Against this backdrop, EUR/USD extends the recovery from lows below 1.10, eyeing the 100-DMA marginally below the 1.11 handle, while the immediate resistance comes around 1.1070. Despite the ongoing rally, the common currency remains vulnerable at this stage, as dollar demand could reemerge should risk sentiment turn sour. In this context, further developments on the trade front will remain in focus.
As for other events, the FOMC meeting minutes will attract market attention this week. It will be interesting to see the tone the Federal Reserve could strike amid contradictory economic signals from the US economy and the remaining uncertainty around the trade negotiations despite some progress towards a partial deal. Should the US central bank express less dovish rhetoric on economy and monetary policy, the greenback may rally across the high-yielding currencies. In this scenario, EUR/USD could lose the recovery momentum and reverse a part of recent gains.