USD stalemate persists on conflicting drivers

On Tuesday, the dollar didn't show a clear directional trend in the wake of the escalation in the US-China trade war. Contrary to what was often the case of late, the USD hardly profited for the trade tensions. EUR/USD tested the 1.1720 area twice, but the 1.1733 resistance stayed out of reach. Risk sentiment wasn't too bad and improved during the day, even as China announced countermeasures. At the same time, US yields surpassed important technical levels. It gave the dollar downside protection, but USD gains remained modest. EUR/USD finished the day at 1.1667 (from 1.1683). USD/JPY closed at 112.36 (from 111.85). Overnight, Asian equities further ‘ignore' the US-China trade conflict, showing broad-based gains. The BOJ as expected left its monetary policy unchanged. In a speech at WEF, Chinese PM Li reiterated that China won't use currency devaluation as an instrument in the trade war and that it aims a stable currency. The Yuan gains slightly ground (USD/CNY 6.85 area). The comments from Li had also modest positive spill-over effects on the Aussie $. AUD/USD extended its rebound beyond 0.72. Overnight, US data showed that China reduced holdings of Treasuries in July. This might raise US yields, but it is doubtful that it will support the dollar. There are again few eco data today. US housing starts/ permits are not the focus of USD trading. A speech of ECB's Draghi is a wildcard. Of late, there were plenty of conflicting factors for EUR/USD trading (trade war, EM stress, Draghi's positive assessment, rising US interest rates), leaving the cross rate in an indecisive pattern. The USD performance is not really convincing, but for now, it looks that the big interest rate buffer is strong enough to prevent a building up of USD shorts. Short-term, we keep a neutral bias on EUR/USD until it becomes clear which narrative will prevail as a driver for USD/global FX trading. 1.1733/50/91 resistance is the first topside reference. A break won't be evident, but we are becoming more alert for a move in that direction.

Yesterday, there were no UK data. Brexit headlines brought little hard news. EUR/GBP closed at 0.8875. Today, the UK CPI is expected slightly softer at 2.4% Y/Y from 2.5%. There will be plenty of Brexit comments on the sidelines of the EU Summit. EU politicians will probably maintain a positive tone. We don't expect a break-through, but a constructive tone might be slightly sterling supportive in a daily perspective.

                              Start Trading with Free $30    : CLAIM NOW $30

VERIFY YOUR ACCOUNT AND GET YOUR $30 INSTANTLY ,MAKE MONEY WITHDRAW !!

               IT IS POSSIBLE TO SHIFT FROM $30  TO  $1,000,000  TRY  TODAY

IF  YOU  FACE  ANY  PROBLEM  TO  GET  THIS  OFFER  PLEASE CONTACT                                                                   US FOR

SUPPORT ,  CLICK  SMS  BAR  ABOVE  THEN  TALK  TO  US.