The euro and the pound have recovered from Friday's losses, gradually resuming their upward movement. This is supported by the resumption of U.S.-China negotiations today, aiming to further ease tensions over rare earth minerals and advanced technologies following last week's phone conversation between leaders Donald Trump and Xi Jinping.

The stakes are high, as the outcome of these negotiations will determine the stability of the global economy and the future of high-tech industries. Rare earth minerals, which are key components in electronics and renewable energy production, have become a battleground in the trade war, while restrictions on technology exports threaten the competitiveness of both American and Chinese companies. Successful negotiations will require a willingness to compromise from both sides. The U.S. will likely push for greater transparency and fair competition in China's tech sector, while China will insist on lifting export restrictions and securing guaranteed access to the U.S. market.

Traders are closely watching for any signals indicating a potential convergence of positions. Any hint of readiness for concessions will trigger a positive reaction in the currency market and raise hopes that the U.S. and China can find common ground despite their differences. Otherwise, further escalation could negatively impact the global economy, heightening uncertainty and slowing growth.

Recently, both sides accused each other of walking away from an agreement in Geneva in May, when they had at least agreed to a temporary reduction of tariffs that had surged by more than 100%. After reaching points of agreement with Xi on resuming shipments of critical minerals, Trump stated that he expects the meeting in London to go "very well."

On Saturday, China announced that it had approved several applications for the export of rare earth metals, though it did not specify the countries or industries involved. "We want rare earth elements, magnets essential for mobile phones and everything else, to flow just as they did before early April, and we don't want technicalities to slow this down," said Kevin Hassett on Sunday.

Trade tensions between the U.S. and China escalated earlier this year when Trump increased tariffs on Chinese goods, prompting Beijing to take retaliatory measures. Although the Geneva agreement was intended to pave the way for broader de-escalation, subsequent negotiations quickly stalled amid mutual accusations.

As noted above, today in London, U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer will meet with the Chinese delegation led by Vice Premier He Lifeng. The participation of Lutnick, who oversees restrictions on the sale of advanced technologies, signals that Trump may be ready to consider lifting some restrictions that threaten China's long-term growth ambitions.

While the Trump-Xi phone call last week sparked some hope for tariff reductions between the trade partners, investor optimism remains cautious. So far, Trump has secured only one new trade deal — with the United Kingdom — which is surrounded by questions since key details have not been disclosed. Trump's tariff deferral on Chinese goods expires in August unless he decides to extend it. The White House has stated that if no agreements are reached, Trump plans to revert tariffs to the levels initially announced in April or even lower, exceeding the current base rate of 10%.

At the moment, Xi seems to be betting that a reboot in relations will lead to tangible wins in the coming weeks and months, including tariff reductions, easing of export controls, and a less confrontational tone. After his call with Trump, Xi said he expects the U.S. to reverse negative measures taken against China.

As for the current technical picture of EUR/USD, buyers need to consider reclaiming the 1.1430 level. Only this would allow targeting 1.1460, and from there, it would be possible to climb to 1.1490, though doing so without support from major players will be difficult. The farthest target would be the 1.1530 high. If the trading instrument declines, I expect significant action from major buyers only around the 1.1400 area. If there is no support, waiting for a renewal of the 1.1361 low or open long positions from 1.1314 would be preferable.

Regarding the GBP/USD technical picture, pound buyers must break through the nearest resistance at 1.3581. Only then will it be possible to target 1.3613, above which a breakthrough will be quite challenging. The farthest target would be the 1.3659 area. If the pair falls, bears will attempt to reclaim control over 1.3544. If successful, breaking through this range will deal a severe blow to bull positions and push GBP/USD toward the 1.3505 low, with the prospect of reaching 1.3470.