US president Trump is to meet with European Commission President Juncker, later today in Washington. The meeting is expected to focus on the US tariffs on steel and aluminium as well as their extension to European cars. The main aim of president Juncker is expected to be a de-escalation of the trade tensions between the two large economies. Analysts state that a potential escalation could hurt the risk sentiment of the market for USD, not only against EUR but against JPY as well.
EUR/USD remained in a sideways movement, as analysed yesterday, well between the boundaries of the 1.1745 resistance line and the 1.1640 support line. We could see some relatively increased volatility on the pair today should the Trump-Juncker meeting display progress, however currently we retain our sideways bias. Technically, it would be evident to note that the RSI indicator in the 4 hour chart remained near the reading of 50, implying an indecisive market. Should the bulls lead the charge in the pair’s direction we could see it breaking the 1.1745 resistance line and aim for the 1.1830 resistance hurdle. Should on the other hand the bears be in the driver’s seat, we could see the pair breaking the 1.1640 support line and aim for the 1.1580 support barrier.
USD gained slightly on the easing of trade fears yesterday against its major counterparts. However, wariness persisted and limited any USD gains especially against the Yen. A remark made by president Trump, of relying on alternate means to control acquisitions, signaled a less confrontational path regarding the US intentions, to the markets on Tuesday. Specifically the US president seems to be lingering more on US Treasury Secretary Mnuchin’s positions, as the US may rely on a US committee which makes background checks regarding business acquisitions, in order to curb Chinese take overs or even investments to high tech US companies. On the Canadian front, there appears to be a spill-over of the US tariffs, as Canada seems to be preparing new regulations regarding steel import quotas and tariffs on China and other countries. The new regulations could constitute an effort of the Canadian government to control steel imports which may be diverted from the US. Should there be positive headlines about the US intentions regarding trade wars, we could see the USD strengthening.
USD/JPY, rose yesterday breaking the 109.75 resistance line, however corrected somewhat during today’s Asian morning. We could see the pair have some bearish tendencies today, should there be an escalation of the trade war issue, as the USD may weaken and Yen strengthen due to its dual nature as a safe haven. Should the pair come under selling interest we could see it breaking the 109.75 support line and aim for the 109.25 support barrier. If it finds buying orders along its path, we could see it breaking the 110.25 resistance line.
According to media, on Monday evening, President Trump said that he gave instructions to find Chinese imports at an aggregated value of about 200 B for additional tariffs of 10%. The announcement was made after China announced its retaliation measures which were considered as unfair by the White House. President Trump also stated that additional tariffs could be placed, should there be further Chinese retaliations. If the situation escalates, we could see safe havens strengthening even further.
USD/JPY dropped considerably during today’s Asian morning breaking the 110.40 support level, now turned to resistance. The drop reflected the strengthening of the Yen as a safe haven. We could see the current course of the pair continuing as uncertainty especially about the US-Sino trade tensions remains and the pair could continue to be sensitive to such headlines. Should the pair continue to be under a selling interest, we could see it breaking the 109.75 support line and aim for the 108.95 support barrier. Should it find buying orders along its path we could see it correcting and breaking the 110.40 resistance level.