Unless you’ve been living under a rock, then you should know that market players had been at the edge of their seats waiting to see if the U.S. would raise its tariffs on Chinese goods as Trump had threatened last week.
Well, unlike Game of Thrones’ “Battle of Winterfell” episode, we actually saw action today.
Just past midnight the U.S. has officially imposed 25% dues on $250 billion worth of Chinese goods, more than double than the 10% initial figure.
Officials of the Chinese Commerce Ministry have vowed “necessary countermeasures” as they deny allegations that they’re backing out on major aspects of the working trade deal.
Not all hope is lost though! U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are still scheduled to hold talks with China’s Vice Premier Liu He at the USTR early today.
Can uncertainty over the U.S.-China trade deal push the dollar higher again?
USD/JPY is now trading just below the 110.00 mark, which is also near the bottom weekly ATR on the daily time frame. What’s more, stochastic is showing an oversold signal!
Aside from the dollar going back to its safe haven status, we also have the U.S. CPI report coming up in a few hours. See, analysts are expecting slightly faster core inflation figures today.
Whether or not today’s headlines push the dollar higher, I will wait for momentum before I place any order on the pair.
Specifically, I will wait for USD/JPY to trade back above yesterday’s highs and this week’s bottom weekly ATR before I think of buying the dollar.
If USD/JPY ends up extending its losses, though, then I’ll also set up short trade setups that would take advantage of possible moves down to 108.80 or even 107.50.
What do you think? Will the dollar bounce higher? Or will the bears extend their party all the way to USD/JPY’s previous lows?
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