The dollar weakens due to increased optimism about the trade agreement

10.10.2019 10:34|Forex conotoxia.com

Forex Trading is provided by Conotoxia Ltd., which has the right to use the Conotoxia trademark. Conotoxia Ltd. is regulated by CySEC (licence no. 336/17). 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

The US currency has fallen against major currencies, which has consequently led the EUR/USD exchange rate to the highest level since September 24 and exceeding 1.1000. The weakening of the dollar is clearly visible on currencies such as the Australian dollar and the New Zealand dollar. The main reason for the mentioned above changes is to be the progress of the US and Chinese trade talks.

According to the Bloomberg news agency, the White House intends to implement a previously agreed currency pact with China under a partial trade agreement, as a result of which the tariff increase planned for next week may be suspended. Investors also reacted to the New York Times report that US President Donald Trump will soon release licenses allowing US companies to supply Huawei with certain groups of goods.

Chinese and US negotiators are due to start meeting again in Washington on Thursday in the last round of talks to conclude a trade agreement or some part of it. If no agreement is reached, the trade war could be exacerbated even more because the US plans to increase tariffs on Chinese products as early as on October 15, and then to the European Union on October 18. If this had happened, the slowdown in the global economy would have deepened considerably, but for now investors are counting on a positive conclusion of the current talks.

AUD/USD weekly chart

AUD/USD weekly chart. Source: Conotoxia trading platform

If, in fact, trade talks end with even the smallest success that Trump should care about, because the American industry is already experiencing the effects of a trade war, then one of the most interesting currency pairs seems to be the AUD/USD pair. The chart shows a four-time support test of 0.6686 and hammer candlestick pattern from last week. If the support is defended, the pair could rise at least to the line drawn through the tops, where we can spot the first significant resistance.

 

Daniel Kostecki, Chief Analyst Conotoxia Ltd.

 

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.


See also:

Oct 9, 2019 11:26 am

Pound under pressure as brexit deal hopes fade

Oct 8, 2019 10:31 am

New Zealand dollar one of the weakest currencies

Oct 7, 2019 9:40 am

Key events of the week (7-13 October)

Oct 4, 2019 10:58 am

Dollar waits for US labor market report

Oct 3, 2019 10:14 am

Stocks under pressure. The trade war moved to Europe

Oct 2, 2019 12:13 pm

US stocks drop most since August

Start chat