Top Trade Setups in Forex - Trade War & Geopolitical Tensions Plays!
|The U.S. Dollar Index fell 0.2% on the day to 98.39 yesterday, as President Trump is expected to face impeachment inquiry and U.S. consumer confidence was weaker than expected.
The euro rebounded 0.2% to $1.1014. The German IFO Business Climate Index edged up to 94.6 in September (vs. 94.5 expected) from 94.3 in August. The British pound rose 0.4% to $1.2486. The U.K. Supreme Court overturned Prime Minister Boris Johnson's decision to suspend the Parliament.
On the economic data side, the U.S. Conference Board Consumer Confidence indicator dropped to 125.1 in September (vs. 133.0 expected) from 135.1 in August. On Wednesday, we assume new homes sales to grow 3.6% on month to an annualized rate of 658,000 units in August.
Gold - XAU/USD – Safe Haven Triggers Amid Trade War
On Wednesday, the precious metal gold opened at $ 1531, and it's still tossing in profit and losses. On Friday, after the cancellation of planned US Farms visit by Chinese Delegates, the uncertainty over US-China talks escalated at the end of last week.
However, on Monday, Steven Mnuchin, US Treasury Secretary clarified that the cancellation of the visit was requested by Trump administration itself and the talks between US & China are rescheduled in early October. He further told that he, along with Robert Lighthizer, a US Trade Representative, would meet Liu He, a Chinese Vice Premier for the talks.
This statement by Mnuchin raised the possibility of a breakthrough in prolonged Trade War between US & China which has been a cause of slowdown of global economic growth.
Another report showed that China has allowed its companies to import US soybeans to worth millions of tons without import tariffs. This news gave possible signs of positive outcomes from the upcoming meeting between two sides. The hope for the end of Trade disputes between the two biggest world economies gave strength to the US Dollar on Tuesday and cause a slowdown in the upward movement of Gold prices.
Gold was moving in a bullish trend from last week due to prevailing geopolitical tensions and global economic slowdown. But, today it showed a slightly bearish trend in the beginning.
At 19:00 GMT, the release of CB Consumer Confidence by US-based Conference Board Incorporation showed a figure of 125.1 in comparison of expected 134.1. The decline in Consumer Confidence data made the US Dollar weak, and the prices of Gold started to rise again and has recreated the bullish trend. Gold is currently trading at $1533.080 after placing a high of $1535.710
Gold - XAU/USD - Daily Technical Levels
Support Resistance
1519.7 1539.79
1507.64 1547.83
1487.55 1567.92
Pivot Point 1527.73
XAU/USD - Daily Trade Sentiment
Gold got a bullish breakout at 1525 area which leads its prices towards 1,533 resistance area. For now, it's forming Doji below 1,534 area, suggesting odds of a bearish retracement. We may see gold dropping towards 1.527 and 1,523 the 38.2% and 61.8% Fibonacci retracement levels. However, the bullish breakout of 1,533/34 can extend buying until 1,550.
AUD/USD – Aussie Weakens Over Trade War
The AUD/USD pair is opened today at 0.67731, and it is currently moving at 0.67996 after placing a high of 0.68058 and is moving in a bullish trend. At 14:55 GMT, the Governor of Reserve Bank of Australia, Philip Lowe gave a speech on Australian Economic Update in Armidale. Several months ago, RBA turned dovish because of the escalated Trade War. However, today, his statement was not as dovish as was being expected.
He stated that the Fundamental long-term factors for Australian economy were substantial, and there was a need to capitalize on them. He declared the US-China Trade disputes as to the most prominent current Global Risk. He also mentioned that uncertain geopolitical issues are driving the global economy to the downside.
He stated that the inflation was expected to pick up but would remain within the target range of 2-3& for some time. He further said that it was possible that Australia would need an extended period of low interest rates. On the comments of Governor of RBA, the Australian Dollar rose and created a bearish trend for AUD/USD.
On the flip side, the US Dollar was under pressure today because of the poor economic data release. The Conference Board released its index of Consumer Confidence at 19:00 GMT; the figures showed that it has fallen in the month of September to 125.1 from previous month's 134.2. Another release about Richmond Manufacturing Index by Federal Reserve Bank of Richmond at 19:00 GMT came as -9 as compared to expected 2. This data also gave a negative impression on the US Dollar today.
The positive response of Lowe’s speech towards Australian Dollar and adverse reaction of weak economic data release from the US made the AUD/USD pair movement in an upward direction for today.
AUD/USD - Technical Levels
Support Resistance
0.6777 0.6813
0.6756 0.6827
0.6721 0.6863
Pivot Point 0.6792
AUD/USD - Daily Trade Sentiment
On the 4 hour chart, the AUD/USD has formed the double top pattern at 0.6800, and below this, we can see a bearish momentum in the Aussie dollar. On the lower side, the AUD/USD has immediate support at 0.6760. The bearish violation of this level could trigger further bearish moves in the AUD/USD until 0.6742 and 0.6722 area today.
USD/CAD - Ascending Triangle Plays
On Wednesday, the USD/CAD pair opened at 1.3238; it is currently trading at 1.3256 after placing a low of 1.3235, showing a downward trend. The lack of any Canadian economic data releases today moved USD/CAD dependent on US Dollar and Crude Oil prices.
The data published related to US Consumer Confidence index by Conference Board on 19:00 GMT, showed that it has fallen in the month of September to 125.1 from previous month’s 134.2. US Dollar index fell after this release, making USD/CAD move in the same direction.
On the other hand, the commodity-linked Loonie suffered due to the falling prices of Crude Oil today. The statement that the end of September will restore Saudi Oil production made it difficult for the Canadian Dollar to outperform the US Dollar.
Hence, USD/CAD is following the bearish trend today in the account of weak US economic data and fallen Crude Oil prices.
On coming Wednesday, there is a release about US Crude Oil Inventories which will be placing a strong influence over this pair movements.
USD/CAD - Technical Levels
Support Resistance
1.3223 1.3266
1.3206 1.3292
1.3163 1.3335
Pivot Point 1.3249
USD/CAD - Daily Trade Sentiment
On the technical side, the USD/CAD has formed an ascending triangle pattern which is supporting the USD/CAD at 1.3235 area. The formation of Doji candle right above this level is signaling odds of a bullish reversal.
At the same time, level 1.3235 is also extending support due to bullish trendline and horizontal trendline, which is ultimately making this level a double bottom.
The USD/CAD, therefore, can stay in buying above 1.3235, whereas, selling should also be preferred below this level until the next support level of 1.3200 and 1.3180.
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