May 9 (Reuters) - Given the recent short squeeze in the dollar, there is a sense that positioning in much less of a hurdle for further downside in the dollar -- and upside in EUR/USD -- which should open the door for a fresh leg lower in the greenback. In particular, a hold of 1.1200 in EUR/USD has been seen as a potentially encouraging sign for dollar bears, and this is exactly what occurred overnight. Heading into the weekend, there is an air of optimism surrounding the upcoming U.S.-China trade, in large part due to the rhetoric from the Trump administration. U.S. President, Donald Trump, said that negotiations will be substantive, predicting that the 145% tariff rate will likely come down. Consequently, U.S. equities are not far off recent highs, while the pullback in the dollar remains a shallow one so far. However, this only raises the disappointment risk, particularly as Trump says an 80% tariff on Chinese goods seems right. In turn, risks continue to lean against the dollar going forward, which could take EUR/USD back to 1.14-1.15 in the near-term.
EURUSD hourly chart

(Justin McQueen is a Reuters market analyst. The views expressed are his own.)