EUR/USD: China's Xi hits right notes, could put a bid under USD

• China's Xi talked reforms, adopted a pro-globalization stance.
• XI talk soothes fears of a trade war, could boost demand for the greenback.

The EUR/USD fell 0.10 percent to 1.2306 in Asia even though China's President Xi's pro-globalization stance lifted the risky assets and pushed the EUR/JPY cross higher.

Xi talked about cooperation, mutual progress and further opening up of the Chinese economy in a statesmanlike performance. He added that China will reduce import tariffs for autos and other products.

The pro-globalization stance has for now at least calmed fears of a tit-for-tat trade war with the US. Hence, the American dollar could find bids (EUR/USD could come under pressure), especially against the common currency as trade wars are widely believed to be USD negative.

That said, the EUR/USD is still holding well above the key ascending trendline (drawn from the July 11 low and Dec. 18 low). Further, President Draghi's upbeat view on the economy despite trade-related uncertainties will likely keep aggressive EUR bears at bay.

Only a daily close below the ascending trendline would turn the tables in favor of the bears.

EUR/USD Technical Levels

Friday's rebound from the trendline support is encouraging. Still, a clear break above 1.2345 (April 2 high) is needed to put the bulls back into the driver's seat. In such a scenario, the EUR could revisit 1.2476 (March 28 high) and 1.25 (psychological resistance).

On the other hand, a failure to hold above the descending 10-day MA lined up at 1.2293 could yield a deeper pullback to 1.2216 (April 6 low). If cleared, the bears will likely attack 1.2154 (March 1 low).