USD Receives Boost Despite Escalating Trade Tensions
MaiMarFX | Jun 20, 2018 06:09AM ET
The U.S. dollar benefited from its safe haven status while global markets tumble on escalating trade tensions. The Trump administration announced to implement an additional $200 billion in tariffs against China in response to China’s decision to pursue fresh tariffs on US goods. While trade wars intensify, market participants hope that the latest threat from the Trump administration prove to be just another negotiating tactic.
The euro depreciated against the dollar and cautious comments from Draghi at Sintra even increased the pressure on the single currency. Draghi stated in his speech yesterday, that the ECB will be patient in determining timing of a first rate hike.
EUR/USD
Sellers in the EUR/USD have shown-up again after the pair failed to overcome the 1.1650-level. We will turn our focus to the 1.15-level which remains a crucial support for now. Looking at the 4-hour chart we see that the euro is still trading within an overall support zone ranging from roughly 1.1650-1.15 (blue area). A break below 1.15 could open the door for a steeper slide. Whether we will see accelerated bearish momentum depends on the risk appetite for dollars amid the trade war theme.
GBP/USD
The pound continued its slide against the dollar and dropped below 1.32. We will keep tabs on the 1.3120-1.31 area which could prove a short-term support-zone. A current resistance is however seen at 1.3220.
What will be important for today? Draghi and Fed Chairman Powell will join a panel on central bank policy at the third and final day of the Sintra central bank forum.
The British pound awaits a key Parliament vote on the EU Brexit status today. This vote could get the pound moving as it will decide what level of say Parliament has over Brexit outcomes.
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