U.S. China trade war continues

The U.S. dollar was seen trading down on Tuesday. Fresh news about the U.S. slapping China with higher tariffs was met by China responding in the same. The markets were however to the reports.

Economic data on the day was sparse.

In New Zealand, the current account data showed that the deficit increased to 3.3% of the GDP for the quarter ending June. The deficit was higher than expected.

The Bank of Japan held the monetary policy meeting earlier today. As widely expected, the central bank left the interest rate and QE unchanged at today's meeting. The markets are currently expecting the BoJ Governor Kuroda to speak during the press conference.

The European trading session starts off with the inflation report from the UK. Economists forecast inflation to rise 2.4% on the year in August. This marks a slight deceleration from the 2.5% increase seen the month before. Core CPI is expected to also ease to 1.8% in August from 1.9% previously.

The NY trading session will see the U.S. building permits and housing starts data. Investors will be keen to see if the slowdown in the pending and existing home sales affected the housing starts and building permits report.

EURUSD intraday analysis

EURUSD (1.1670): The EURUSD closed bearish on Tuesday after price initially rallied to intraday highs of 1.1730. Price action is seen trading within the highs of 1.1730 and 1.1626 levels. The tight range is expected to push the currency pair toward a breakout eventually. The bias remains to the upside on a successful breakout above 1.1730. To the downside, besides the horizontal support level, the rising trend line is also likely to provide dynamic support.

GBPUSD intraday analysis

GBPUSD (1.3149): The GBPUSD currency has been moving higher in a slightly parabolic pattern. This could trigger a downside breakout as the currency pair is seen consolidating into a rising wedge pattern. A downside breakout could push GBPUSD back to 1.3036 level of support. If the initial support fails, then we could expect a further decline down toward 1.2808. However, with the upside resistance target of 1.3205 yet to be reached, we expect the initial support to hold.

XAUUSD intraday analysis

XAUUSD (1200.58): Price action in gold remains subdued as the consolidation continues near the 1197.50 level of support. However, given the failure to post lower highs, we expect to see a turnaround in prices. To the upside, the target remains at 1219.75 while to the downside, a breakdown below 1197.50 could trigger declines to 1183.30. The trend is flat at the moment, but this could potentially change on a strong rally if the previous high at 1212.55 is breached.