News Commentary
The trade conflict between the US and China has just been put into action today when U.S. tariffs on $34 billion worth of Chinese goods went into effect at 04:00 GMT. An additional tariffs on another $16 billion is expected to take place in the upcoming two weeks. Meanwhile U.S. President Donald Trump has given instructions to identify a further $300 billion on possible Chinese goods.
China has also vowed to reply with tariffs on $34 billion of American goods. Beijing had previously said it would impose tariffs on U.S. agricultural products, crude imports, and vehicle products.
Yesterday, Federal Reserve policymakers enhanced the view of further increases in interest rates as the U.S. economic growth continued “above trend”.
“Participants generally expected that further gradual increases in the target range for the federal funds rate would be consistent with the solid expansion of economic activity, strong labour market conditions, and inflation near the Committee’s symmetric 2 per cent objective over the medium term,” the Fed said in the minutes.
The Fed’s statement to continue tightening monetary policy was boosted by a continued rally in inflation and a solid labour market, despite concerns about the impact of rising trade tensions on spending and business sentiment.
Today’s big data will be at 12:30 GMT with NFP. The expectation goes for 195K, less than the previous reading 223K
Also keep an eye on average hourly earnings, which is expected to remain the same as the last reading with 0.3%
Chart Analysis
USD INDEX
As we expected on the daily chart, the price had reached the key resistance at 95.5 and bounced back from it, powered by divergence on RSI.
The price also had shaped a reversal double top pattern.
So, the index is supposed to get back down to the support zone of 93.2-92.6 again, then start its journey to the C wave.
USD/JPY
On the daily chart, the pair retested the key resistance of 111.1 again and the descending trend from the high of 2017 to shape a double top reversal pattern.
So, the price is expected to assure the next bearish move that leads the price to the support zone of 108.65-108.15.
AUD/USD
On the daily chart, the price has reached the support zone of 0.7325-0.7365.
The pair is supposed to find some breath powered by divergence on RSI to reach the key resistance of 0.7515, where the descending trend from the high of February is located.
As we expected before, the price has reached the support zone 81.2-80.5 as the price is moving sideways.
So, the price is expected to retest the head of the pattern to reach the levels of 84-84.4 again.
On the 4 hour chart, we can see a break above the descending wedge along with shaping head & shoulders pattern.
A GARTLEY harmonic pattern has enhanced the bullish bias before 84.35.
Watch the neckline of the H&S which is located at the mentioned resistance (84.35) with moving average 200 too.
A break above these levels would take the price up to the key resistance 87.
