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EURUSD had a light downtrend until last Friday where China announced a USA – China trade war retaliation by applying $75 bn tariffs on US goods (Soybeans, Oil and Automotive), effective beginning September 1st, 2019. This announcement came only two hours before Jerome Powell’s speech at Jackson Hole. After that, it was a serious conflict between President Trump and Jerome Powell that complicated things even more. During the weekend, we had the G7 meeting where contradictory statements took place: President Trump said that US should apply more tariffs while Larry Kudlow claimed that he doesn’t expect China to retaliate against Trump’s latest tariffs despite Beijing’s warnings. This environment dropped USD and drove EURUSD much higher (its high was at 1.1153 and it finally closed at 1.1144). Of course, we cannot exclude the case of a USA – China trade war resolution by statements and tweets from both sides. This will have a result of changing significantly the attitude of USD. Current Monday is very important because a possible close above last Friday’s close would confirm and entrench the trend change. Our buy positions will target 1.1190 at the first place and maybe 1.1260. Other important news for European and US economy that may affect the pair, increasing the volatility as well is German IFO (Business Climate, Expectations, Current Assessment) & US Durable Goods Orders on Monday, German GDP & US Consumer Confidence Index on Tuesday, German GfK Consumer Confidence on Wednesday, German Unemployment Change, German Consumer Price Index, US GDP and US Advance Goods Trade Balance on Thursday and Eurozone Consumer Price Index and US PCE Core on Friday.
GBPUSD had a good uptrend week, gaining more than 1%, allowing us to benefit from the trailing stop mechanism that we applied to our long positions. The truth is that during the last week the USA – China trade war has dominated the pair reaction more than the Brexit, but the approach of October deadline will give a lead to the Brexit saga! UK Parliament is ready to vote on the no-confidence vote but UK PM Boris Johnson is trying to postpone this vote. On the other hand, Boris Johnson keeps on repeating that UK is ready to pay a £39 bn divorce payment to EU in a case of a no-deal Brexit. The big trading desks seem to start anticipating a change in the Johnson’s hard-line rhetoric and a more compromising attitude from EU leaders and this is something that if shows more evidence, the pair will explode to the upside. In any case, the high volatility of the pair favours opportunistic positions to the upside with no overnight holdings and tight stops.
1.2370 will be our main target for our buy positions on GBPUSD this week. Besides US financial news that are mentioned at the EURUSD section, news from UK include BBA Loans for House Purchase on Tuesday and UK Consumer Credit on Friday.
USDJPY changed its trend rapidly after the latest news of USA – China trade war on last Friday and we couldn’t take our main target before. The pair is approaching price levels that we haven’t seen since the autumn of 2016 and besides weak USD, this has to do with JPY which is considered as a safe-haven currency as global panic regarding a recession takes over. More specifically, the price of 105 is very important and a cementation below that level would mean a very strong bearish trend for the pair. The current week is very fragile and anything may occur depending mainly on Trade – War. We’ll favour a bullish reaction on USDJPY so our long positions will target 106.60. The inflation in Japan is at 0.6%, much lower than the 2% BOJ target, a fact which may push BOJ to start a new QE cycle, especially if FED & ECB will cut aggressively rates and weaken their currencies. Japanese economy has some important news this week that along with US economy news and trade war will affect the pair, such as, Loans & Discounts Corp on Thursday and Retail Trade & Industrial Production on Friday.
EURJPY had a light downtrend last week as we had estimated but not that strong in order to hit our ambitious target of 115.60. Week was profitable anyway on this pair because as usually, we close our trades before weekend. Fundamentally, EUR is weak and due to a global panic of a recession and considering JPY as a safe-haven asset, JPY seems strong. Although there are some concerns for a reaction, we’ll follow this downtrend by opening short positions on EURJPY with main targets 116.50 and our main last weeks’ target of 115.60. European and Japanese financial news are mentioned above at the EURUSD and USDJPY sections accordingly.
Last week was bearish since EURGBP closed at 0.9080 although the week’s low was at 0.9028. Although some news regarding Brexit may give unexpected behaviour to the pair, we consider the price of 0.90 as a very good support that it is difficult to break. Our Machine Learning models advise that there will a reversal soon from this downtrend of the last days. We’ll take advantage of all these and we’ll open buy positions, targeting 0.9115 and 0.9170. News for European and UK economy are mentioned above at EURUSD section and GBPUSD section.
We couldn’t take the target of 1.3350 since last week’s high for USDCAD was at 1.3345 (very close though) but last week was profitable because we closed our buy positions in the money. The storm from USA – China trade war changed the pair’s dynamics with a strongly bearish day, last Friday. Our sell positions for the current week will be low-risk and opportunistic because the environment is very changeable and volatile. Targets will be 1.3260 and maybe the price area of 1.3210. Very important week for USA – China trade war, many financial news form US economy but important week for Canada fundamentals as well with Canadian GDP announcement and Industrial Product Price announcement on Friday.
USDCHF had this nice uptrend that we had estimated and allowed us to hit our first target (0.9815) and to approach very much our second target (0.9880) since last week’s high for the pair was the price of 0.9876. Friday afternoon’s news though, regarding USA – China trade war caused a very sharp drop for USDCHF and finally it closed at 0.9748. The only important new for Swiss economy is the KOF Leading Indicator announcement on Friday so USD will dominate to the pair for one more week. Strong CHF (as usually in the cases of a recession panic) lead us to favour short positions, betting on weak USD too, but there’s a strong probability of USD recovery if things change and both parts (USA and China) make some calm-down statements. Main target is 0.9710 and if there’ll be a drop below 0.97, we’ll pursue 0.9630 as well. Of course we can not exclude an intervention, most probably rhetoric only, from SNB in order to weaken CHF , in case of a big USD depreciation.
The bearish trend of AUDUSD last week, allowed us to take our main first target of 0.6750. This trend was supported from latest news of the USA – China trade war that caused a big drop on USD. It also seems that 0.67 is a very hard support for the pair to be broken. AUD depends a lot from the trade war because Australia is very dependent on China. On the other hand, USD seems very weak after the latest news so the whole thing seems a puzzle. That is why we’ll avoid trading AUDUSD this week, waiting for more recent updates. Besides US news, there are important news for Australian economy this week, such as, the Private Capital Expenditure announcement on Thursday and the Building Approvals on Friday. In case of a real trade deal commodities & AUDUSD are the strongest Long candidates, but there is much more to see in this trade war soap opera.
The well-established uptrend of last week, was brutally interrupted last Friday after the USA – China trade war news & announcements. Fortunately, this happened after we reached our major weekly target of 2,835 points. Our general strategy though was to avoid news trades after last Wednesday due to FOMC Meeting Minutes and Jackson Hole symposium. We believe that this week we should open low-risk and opportunistic trades, both buy & sell, depending on the latest news regarding trade war. Our targets should be below 1% or each trade because we do not trust long-term trends at this moment.
DAX30 had a well-established uptrend last week too, until last Friday events that affected all the financial markets. Our main target of 11,820 points was taken though since last week’s high was at 11,850 points. This week, we will treat all Indices the same way. It means that we will open low-risk and opportunistic trades, both buy & sell, depending on the latest news regarding trade war and our targets will be tight.
Same profile for FTSE100 last week. Bullish outlook until last Friday. The main weekly target of 7,205 points was taken and we’ll treat FTSE100 just like all the other Indices: low-risk and opportunistic trades, both buy & sell, depending on the latest news regarding trade war and our targets will be tight.
Gold had a jump of more than 1.5% last week due to the panic of entering into a recession and approached price levels that we hadn’t seen since April, 2013. Also, weak USD helped on this since Gold is denominated in USD. It seems that the bullish trend still has a long way to go but a possible trade deal would mean a new & strong bearish trend. The price of $1,493 is very critical for such a reversal. We will prefer low-risk long trades this week, close to the price area of $1,500 and our targets will be $1,525 as a main target and $1,560 as an ambitious target.
US Oil was bullish the first three days of last week, allowing us to take our major target at $55.90. We also approached our second target at $57.20 as US Oil had a high at $57.05. Finally, it closed at $53,18 after the fears of a recession and after the latest USA – China trade war news. This week’s strategy will be a range trading strategy at the boundaries of $50 – $55, giving more credits and risk to the short positions.
Copper had a very strong bearish trend last week. More specifically, it opened at $2.5885 and it closed at $ 2.5225, loosing more than 2.5%. This drop had to do with China and the problematic growth numbers in combination with the trade war. We spot a very big trading opportunity though if there will be a trade deal between USA and China that will give to Copper profits more than 10%.