Safe haven inflows continue to dominate the currency landscape for another trading session, as on-going tensions escalate between the United States and China over a fair trade agreement between the two sovereigns.
As trade war fears continue to intensify, global bond yields are tumbling lower, which may signal additional central bank easing to offset the negative side effects of slower global growth. During the Asian Session, the RBNZ (Reserve Bank of New Zealand) agreed to cut their official cash rate (OCR) by 50 basis points to 1.00% in an attempt to support employment & inflation in lieu of US-China Trade Tensions. The 50 bp rate cut surprised most investors because it was much bigger than anticipated (exp. 25bp cut), and this lead to the Kiwi & Aussie tumbling lower across the board.
For today’s session, we’re witnessing demand in EUR/USD, as traders look for opportunity to rotate away from a riskier & weaker greenback in an attempt to insulate themselves from further losses. The yellow metal (XAU/USD) has been shining brightly due to expectations of further rate cuts from the FED. Today’s risk aversion has sent gold rallying to 6-year highs at 1,510.15/oz. As central banks across the globe consider accommodating their monetary policy, gold will have no other choice but to rally higher since it tends to always benefit when central banks adopt inflationary policies.
During the second half of today’s webinar, we had the opportunity to execute a buy order on EUR/USD at 1.1217, prior to the New York Opening Bell, as signs of bullish evidence warranted more upside for the common currency versus the US Dollar. Most dollar-denominated pairs were supported at this time.
During most of the webinar, we reviewed price action in EUR/USD, US Dollar Index (DXY), AUD/USD, EUR/CHF and USD/MXN to identify technical setups that were forming in the market for trade entry.
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Marvin Perry has been an active trader within the Forex market since 2010. He attended the University of Illinois in Urbana/Champaign, and graduated in 2002 with a double major in Cell and Structural Biology and Chemistry. He currently serves as an FX instructor & Quantitative Analyst for the Forex Anatomy Private Trading Community called "The Lab", where he conducts live weekly trading webinars & instruction on Fundamental Analysis & Inter-Market Interpretations of dynamic asset classes and their influence on currencies.