Trade Wars Armistice Counted Against USD

RoboForex  |

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

The currency market started December against the USD. On Monday morning, the major currency pair is trading upwards as investors have no interest in the American currency as a “safe haven” asset. It happened after G20 summit, where the USA and China decided to take a break in their “trade wars”.

The parties agreed on the following: they will stop increasing import duties starting January 1st 2019 for three months in order to resume negotiations on a new trade agreement. Over this period of time, Washington shall postpone introducing additional 25% import duties on Chinese goods and “freeze“ this idea. China, in its turn, is obliged to buy a large volume of US-manufactured goods, including agricultural and commodity products.

Frankly speaking, it the same old soup just reheated, this time not in trading, but in politics. Most likely, the USA will start to put pressure on China to make the future trade agreement more profitable for Americans. There are reasons to believe that China might not like this and the Chinese government will use these three months to stimulate the country’s economy along with domestic demand and improve the banking sector in order to be ready for further “trade wars”.

However, at the moment investors aren’t interested in such distant prospects. The point is that there is a “spur-of-the-moment” thing: euphoria and rebound.

Under such conditions, investors’ interest in “safe haven” assets is reducing, thus making the USD fall.

Looking at EURUSD movements over the last month, one can see a convergent trading range, which means that the correction to the upside continues. The previous local downtrend corrected the quick rising impulse, thus “counterweighing” the market. It seems that the current ascending impulse is heading towards the resistance level and 1.1445. In other words, this correctional movement to the upside is not over yet. At the same time, the pair may start a short-term decline towards the local support at 1.1322 and break it. In this case, the instrument may continue falling towards the key support at 1.1288. However, according to the main scenario, EURUSD is expected to move upwards to reach the Triangle’s upside border.


Disclaimer

Any predictions contained herein are based on the authors' particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein

DISCLOSURE: I wrote this article by myself and have no positions in discussed assets.


The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Can the Media Solve the Partisan Conflict?

Andrew McCarthy, Contributing Editor, The National Review; Michael Zeldin, CNN Legal Analyst; Celeste Katz, Senior Political Reporter, Glamour; Silvia Davi, SVP, Contributing Editor, Equities.com; and Doug Simon, CEO, D S Simon Media discuss how the media’s role has shaped the landscape for communicators and what the media is trying to do to reduce discord in society.

Emerging Growth

CMX Gold & Silver Corp.

CMX Gold & Silver Corp is an exploration stage company. The Company is engaged in the acquisition, exploration and development of silver and copper/gold properties in the USA.