Global financial markets had undergone a sharp end to last weeks trading as optimistic US job figures had supported stocks and other risk assets. However, criticisms from President Trump overnight that tariffs will boost this week on $200 billion worth of Chinese imports have hit hard this morning.
Risk-Off Sentiment
The safe-haven securities and forex pairs gapped lower on the Sydney open with Jpy crosses and risk pairs exerting significant hits as well as the Yuan. Hence, the market is following Risk-off Sentiment as all of the investment is entering bullion and Japanese yen, draining the equity markets. Anyhow, what’s done is done, now let’s take a look at the top trade setups today.
USD/JPY - Bearish GAP & Technical Analysis
The safe haven currency pair, USD/JPY, has opened dramatically lower to place a low around 110.220 today. Investors have reacted to the recent tariff remarks from Donald Trump. Despite lately bouncing off 110.30, the USD/JPY still endures below 14-week long support-line (now resistance) as it trades near 110.80 while going into the European session on Monday.
The 20, 25 and 50 periods EMA’s are left far behind around 111.500, signifying a robust bearish bias of the market.
R3: 112.55
R2: 111.92
R1: 111.51
Key Trading Level: 111.29
S1: 110.88
S2: 110.66
S3: 110.03
USD/JPY - Trade Idea
Consider selling below 111.250 to target 110.500 and 110.250. We don’t have any significant fundamental that can play, however, the trade war sentiment is likely to continue dominating the safe haven currencies.
EUR/USD - Consolidates In a Range, EMA Retest In Focus
The euro has been strengthening against its major rival the US dollar since late April. This transit has at least the makings of a nice short to medium term countertrend rally, if not a complete change in fortune. Recalling, it was hardly late March while the euro was trading above 1.14 to the greenback. The EUR/USD pair fell from the double top high of 1.1218 on the back of modest upward revisions to manufacturing output in the Union, and optimistic US job numbers had bolstered stocks and other risk assets.
On the technical side, the EUR/USD is consolidating in a narrow trading range of 1.1200 - 1.1170. The violation of this will determine further trends for the pair.
The single currency is also facing resistance below 50 EMA, around 1.1190. On the upper side, the EUR/USD can hit 1.1260 marks on the violation of 1.1200. While support stays around 1.1120 today.
R3: 1.1322
R2: 1.1251
R1: 1.1227
Key Trading Level: 1.1181
S1: 1.1156
S2: 1.111
S3: 1.104
EUR/USD - Trade Idea
Let’s keep an eye on 1.1200 as the EUR/USD can stay bearish below and bullish above this level. On both sides, the take profit should be around 40 pips today. All the best!
