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Daily FX Brief, Aug 08 – Forex Trade Setups, Trade War In Play!

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The U.S. dollar index fell further against a bucket of six major currencies. Especially against the yen, as Japanese stocks opened lower in a sign market remain nervous about U.S.-China trade conflicts following significant foreign exchange volatility in the prior session.

Traders anticipate China’s central bank solidifying for the onshore yuan later on Wednesday and currencies are expected to remain steady, given there is no new exchange of policy or bombastic shots between Beijing and Washington.

RBNZ Surprise Rate Cut

On the other hand, the Reserve Bank’s announcement on Wednesday that it was cutting the Official Cash Rate (OCR) by 0.5 per cent to 1 per cent was met with astonishment from economists. At a press conference following the verdict went public, RBNZ Governor Adrian Orr replied to the concern that the huge cut devised him slight wiggle room for future cuts.

Economic Events to Watch Today

Today, the investor’s focus stays on the Chinese Trade Balance, ECB Economic Bulletin and U.S. Jobless Claims. Let’s take a look…

 

 

 

AUD/USD – Daily Outlook

A day before, the AUD/USD currency pair concluded a Spinning top trading pattern on the backdrop of RBA’s 25bps rate cut. Today, as the day is progressing, the AUD/USD pair is near to the opening mark, forming a Dragonfly Doji pattern. Nevertheless, the pair showcased overall fair volatility during the day.

The U.S. China trade war is hurting the Aussie demand, as China is one of the biggest trading partners with Australia. So here’s a thing, whenever we have uncertainty from U.S.-China relationship, we see echos impacting Aussie demand.

Since China is staying away from buying U.S. agriculture products, the U.S. farmers are getting hurt. Farmers are one of the most evident casualties of the U.S.-China trade war, which intensified distinctly this week, as both sides arrived blows that could hold probably disastrous results for U.S. agriculture.

On the 3 hourly charts, the Aussie is pulling back up against the U.S. dollar. The market is trading between 100 and 200 SMAs. A breach above 0.6761 resistance an point to 0.6785 and the 0.6800 figure, according to the Technical Indicator. On the flip side, bears need to break below 0.6740 and 0.6715 on the way down.


 

 

Daily Support and Resistance
R3: 0.6894
R2: 0.6818
R1: 0.6789
Key Trading Level: 0.6742
S1: 0.6713
S2: 0.6666
S3: 0.659

AUD/USD – Trade Tips

Consider keeping an eye on 0.6745, the double bottom pattern. So the bearish breakout o this level can trigger further sell-off in AUD/USD until 0.6720 and 0.6700.

EUR/USD – Daily Outlook

The EUR/USD pair gained bullish momentum during the New York session amid a softer US dollar against majors, as stock market turned bearish, indices in Wall Street turned negative, and the US yields deep to the downside.

Besides, the US-China trade war fears continued to weigh on the USD and drove the pair slightly higher on Thursday, keeping the EUR/ USD supported. After marking the daily opening near 1.1203 level, the EUR/USD pair formed a spinning top candlestick pattern by day end

At the time of writing, the EUR/USD pair trades at 1.1230 staring at the crucial resistance level of 1.1245/50. Today, a bullish breakout could lead to more gains targeting 1.1280 that preserves the 1.1300 area.

To the lower side, immediate support is found at 1.1210, followed by the 1.1160/65 area. A drop well below 1.1160 would shift the bullish short-term outlook.


 

Daily Support and Resistance
R3: 1.1333
R2: 1.127
R1: 1.1236
Key Trading Level: 1.1208
S1: 1.1173
S2: 1.1145
S3: 1.1082

EUR/USD – Trading Tips

Today, I will be looking to stay bullish above 1.1200 to target 1.1245.

GBP/USD – Daily Outlook

The GBP/USD continues on the Recovery track, Ignores no-Brexit deal anxieties. Today in the early market, the GBP/USD currency pair continues trading at the recovery track despite the no-Brexit deal. The pair ignore the concerns of the no-Brexit deal and remain safe as it pulls back to 1.2160.

The European Union lawmakers are also not happy for the Brexit deal negotiations with the United Kingdom, according to Sky News, Prime Minister Johnsons strong stand against the earlier discussed deal with the Theresa May ex-PM of the UK.

Hence, the political and trade news has been prominent since the Asian starts as formally termed China as a currency manipulator and Korea experiment fired 4th round of missiles.

Support anticipates at 1.2120, which was the initial post-crash low. On the lower side, we may find 1.2075, that is the 2019 trough. Further down, we may see support at 1.1985 and 1.1866.

On the flip side, the resistance awaits at 1.2225, which is where the 50 SMA matches the price. The post-crash recovery peak of 1.2250 is next. Further up, 1.2380 and 1.2420 await it.


 

Daily Support and Resistance
R3: 1.229
R2: 1.2221
R1: 1.2182
Key Trading Level: 1.2151
S1: 1.2113
S2: 1.2082
S3: 1.2013

GBP/USD – Trading Tips

Consider staying bearish below 1.2160 while having a target of around 1.2082 today. All the best!

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