Fading Trade War Risks
The US Dollar is on course to end the week in the red today with the Dollar index seen breaking support, now trading at 8-week lows. The move south comes in response to Trump’s announcement that he will now consider reciprocal tariffs on a country-by-country basis instead of opting for a more aggressive ‘blanket’ approach. This approach means that overall tariff levels are likely to be lower and will take a longer time to implement given the required review process. Traders are now eyeing the likelihood that some countries will avoid tariffs altogether with plenty of time now for negotiations to take place ahead of tariffs being implement post-April. Once again, the risks linked to Trump’s trade war appear diluted and USD has fallen lower as a result with risk assets rallying ahead of the weekend.
Peace Talks Impact
Away from the news on Trump’s trade agenda, USD has also been weighed on by the emergence of the Russia-Ukraine peace-talks story. While Zelensky has confirmed that he wont be attending any talks in Munich, traders are anticipating talks to begin soon with some speculation that US, Russian Ukrainian leaders could meet in Saudi Arabia to begin talks. Safe-haven demand has fallen sharply over the last 24-hours as a result, adding to bearish sentiment in USD. Looking ahead today, traders will be watching the latest retail sales figures though even an upside surprise is unlikely to do much to deter current USD selling.
Technical Views
DXY
The sell off in the Dollar has seen the index breaking below support at the 107.24 level, now trading its lowest levels in two months. While below here, and with momentum studies bearish, focus is on a test of 105.97 next and 104.59 below that.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.