EUR/USD trades lower around 1.1350 during European trading hours on Friday. The major currency pair weakens due to a recovery move in the US Dollar (USD) on hopes of an improvement in trade relations between the United States (US) and China.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, resumes its upside recovery on Friday after correcting to near 99.20 the previous day. The USD Index rises to near 99.65 and aims to break above the weekly high around 100.00.

The confidence of financial market participants that the trade war between the world's largest powerhouses could de-escalate has increased as China has signaled that it is considering suspending the 125% duty on imports of medical equipment and some industrial chemicals from the US, Bloomberg reported on Thursday.

This week, dialogues from the White House expressing optimism that Washington and Beijing could make a deal had stemmed hopes that the tariff war would not spiral further. On Tuesday, US President Donald Trump stated that "discussions with Beijing are going well" and added that he thinks "they will reach a deal".

On the contrary, China has denied any discussions with the US. "There have not been economic and trade negotiations between China and the United States," a spokesperson from Beijing said on Thursday. Additionally, China has clarified that the US needs to "completely cancel all unilateral tariff measures" if it wants trade talks.

On the monetary policy front, a chorus of policymakers has indicated that excessive uncertainty due to new economic policies by US President Trump could damage the economy.

Minneapolis Fed Bank President Neel Kashkari warned on Thursday that the uncertainty posed by policies from the President could lead to "business lay-offs".

Source: FXStreet