Forex Analysis & Reviews: Trade war drags the US and China into the abyss (high risks of continuing the fall of AUDUSD and NZDUSD pairs)
time 30.08.2019 09:19 AM
time Relevance up to, 30.08.2019 09:00 PM

The mood on world markets improved slightly again amid confirmation of reports that US-Chinese trade negotiations had indeed resumed. But is it really worth taking this news seriously?

Investors continue to show their high expectations and hopes regarding the achievement of a new trade agreement between Washington and Beijing and an end to the customs duties war. However, the issue of agreement remains open. Everything that happens around this topic does not really resemble any local trade contradictions, but Washington's real aspirations, using measures of economic influence - customs duties, claims against major Chinese companies like Huawei, as well as obvious political pressure manifested in the use of the rhetoric that China is the main geopolitical enemy of the United States, trying to restrain the growth of China's economic and geopolitical dominance.

Given just such a subtext of the trade war, and it just begs, it can be said that an agreement can only be achieved if either one of the parties openly wins this confrontation, or when they are so weakened by the struggle that they will be forced to go to broad compromises.

Such difficult prospects will not bring anything good to the financial markets, as they will plague investors with their uncertainty and high financial risks. For China, this threatens a fall in income from trade with America, and for the States, the risk of higher inflation, which, given the prospects for a falling economic growth, will replace the era of its stagnation with a steady period of high inflation. In this case, in the event of falling American incomes and high import tariffs, investment activity will slow down. The status of the dollar as a world reserve currency will gradually melt, and with it the attractiveness of the dollar.

But, despite such a pessimistic view, these are still distant prospects, if the confrontation between Washington and Beijing does not end at a peculiar red line, beyond which lies the abyss.

In the meantime, in our opinion, the parties believe that they still have gunpowder to fight each other. The tug of war will continue, which will be a good reason for high volatility in the markets, accompanied by sharp changes in moods from positive to negative and vice versa. In this situation, the US dollar will maintain approximately its current position, since its real decline against major currencies will be compensated, in turn, by weakening of their exchange rates by the national Central Bank. It seems to us that this situation will continue in the short term.

Forecast of the day:

The AUDUSD pair remains in a short-term downward trend amid the trade war between the United States and China. We expect its decline to continue to 0.6675.

The NZDUSD pair also remains hostage to the trade crisis between the United States and China. We believe that the pair will continue to decline to 0.6245.

This image is no longer relevant

This image is no longer relevant

Pati Gani,
Analytical expert of InstaForex
© 2007-2022
Benefit from analysts’ recommendations right now
Top up trading account
Open trading account

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.

  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
  • Ferrari from InstaForex
    Top up your account with at least $1,000
    join the contest and win Ferrari
    F8 Tributo
  • Chancy Deposit
    Deposit your account with $3,000 and win $1,000
  • 100% Bonus
    Your unique opportunity to get a 100% bonus on your deposit
  • 55% Bonus
    Apply for a 55% bonus on your every deposit
  • 30% Bonus
    Receive a 30% bonus every time you top up your account

Recommended Stories

EUR/JPY: level of 143.27 seen as key downside obstacle

The EUR/JPY pair dropped again after failing to reach the 145.00 psychological level or to approach the downtrend line. At the time of writing, it was trading at 143.55

Ralph Shedler 22:00 2022-11-28 UTC+2

USD/CAD: upside continuation

The USD/CAD pair registered a strong upside movement after retesting the 1.3325 downside obstacle (the upside obstacle turned into a downside obstacle). Now, is almost to reach the 1.3495 former

Ralph Shedler 21:26 2022-11-28 UTC+2

Bitcoin's upside invalidated, 15,632 as key support

The price of Bitcoin slipped lower after reaching the 16,783 level. Now, it is trading at 16,178 at the time of writing. In the short term, it could move sideways

Ralph Shedler 21:00 2022-11-28 UTC+2

Ethereum: upside still possible

Ethereum dropped in the short term also because BTC/USD slipped lower. It is testing and retesting the near-term downside obstacles. Despite the current retreat, the altcoin could still

Ralph Shedler 20:59 2022-11-28 UTC+2

USD/JPY seems oversold at around 137.65

The USD/JPY pair dropped as much as 137.49 today where it has found support. Now, it has rebounded and it's trading at 138.77 at the time of writing. The bias

Ralph Shedler 18:58 2022-11-28 UTC+2

November 28, 2022 : EUR/USD daily technical review and trading opportunities.

Now the market remains under buying pressure until significant downside rejection occurs around one of the key- levels probably around 1.0600. In the mean time, any downside movement towards 1.0000

Mohamed Samy 18:43 2022-11-28 UTC+2

November 28, 2022 : EUR/USD Intraday technical analysis and trading plan.

Another bearish pullback to test the price levels of 0.9500 was recently executed. Intensive bullish price action was demonstrated around the lower limit of the current movement channel. Initial bullish

Mohamed Samy 18:42 2022-11-28 UTC+2

November 28, 2022 : GBP/USD Intraday technical analysis and significant key-levels.

Quick bearish decline was executed towards 1.1075 & 1.0860 where significant Fibonacci Expansion levels were located. Based on the upcoming price action and the next weekly candlestick closure, the next

Mohamed Samy 18:42 2022-11-28 UTC+2

Technical analysis of GBP/USD for November 28, 2022

Pound Sterling is currently trading at 1.1850. However, if the trend reverses from this point, then a possible future share price target could be 1.2026. If the price of Pound

Mourad El Keddani 18:14 2022-11-28 UTC+2

Weekly review of EUR/USD for November 28, 2022

The EUR/USD pair traded in different directions in the range of 1.0360 - 1.0209 and closed the day without significant changes. Today it fell a little, dropping from

Mourad El Keddani 17:33 2022-11-28 UTC+2
Can't speak right now?
Ask your question in the chat.