Trade tensions between the U.S. and China still remain on investors minds as the two largest economies in the world faced over trade tariffs.
Stocks stumbled on Tuesday after U.S. President Donald Trump threatened to impose tariffs on another $200 billion of Chinese goods if China refused “to change its practices,” he said.
But currency markets had breathed a sigh of relief after Beijing signalled its tolerance of a stronger currency by fixing a stronger daily midpoint than expected. Safe-haven currencies such as the Swiss franc and the Japanese yen were still well-supported, though.
“Market volatility remains very low and the headline risks from trade concerns should push that higher,” said Hans Redeker, global head of currency strategy at Morgan Stanley.
Economists don’t expect the BoE to raise rates on Thursday, and some not optimistic about their forecasts for a rate rise in August, which would be only the central bank’s second increase since the 2008 financial crisis.
The House of Commons was to vote on the EU withdrawal bill, the government’s flagship piece of Brexit legislation, later in the day.
The government is seeking to defeat an attempt to give MPs a “meaningful vote” before Britain could leave the EU without a deal.
The vote is coming at a time of growing investor nervousness that Brexit negotiations could fail to reach an agreement.
As expected, after breaking the wedge reversal pattern, the price met the broken ascending trend from the high of 2017, meeting the broken ascending channel, heading the B level of the ABC Elliot waves. Divergence on RSI followed by breaking the upper line as shown.
According to Elliot, we can see a spike from that level to 97.9.
On the daily chart, as we expected the pair had broken the ascending channel followed by bouncing from the descending trend from the high of 2017 and the key resistance of 111.1.
The price also broke the support of 110.05 to reach the next support 108.15, to then get back up again from this level to retest the level at 110.05.
As you can see on the chart, the price is moving according to Elliot waves. By forming the A & B waves, we are waiting for the next move down to hit the C level which is located at the support of 106 and also to meet the ascending trend from the low of 2016.
So, a bounce has started and on its way.
On the daily chart, the price eventually broke the resistance zone of 1.309-1.299, followed by a break of the ascending trend line from the high of 2016, with an engulfing candle.
As we expected that, we need another confirmation bullish candle to assure the long bias, the price is expected to reach 1.34.
On the daily chart, as we expected before, the price had made its way up to targets at the resistance zone 1.0815-1.0865, boosted by a BAT harmonic pattern.
The price has already made its retracement as we expected it to.
Reaching the support zone and shaping the Gartley harmonic pattern, the price is supposed to continue its bullish movement up to the 1.1045 level after forming hammer & engulfing candles respectively.