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Can you keep up with Trump’s Trade Wars?

Oct 4 2019, 03:39 PM (BDT) |


There is another tariff dispute on the horizon, which affects the regions that are already in the midst of a serious conflict. The United States and Europe are suffering from their disputes with China and the UK on trade wars and Brexit tensions. Both conflicts have contributed to global tensions and recession-related worries.

The World Trade Organization has approved of the United Stated imposing new 10% tariffs on the euro area, targeting European-made Airbus planes and 25% tariffs on French wine, Scotch and Irish whiskies, and cheese from across the continent. This followed a dispute over illegal European aircraft subsidies in the form of friendly loans, and debt forgiveness to provide grants to infrastructure. The tariffs will form about $7.5 billion, annually.

In response, Airbus, issued a statement, which says they are ‘hopeful that the U.S. and the EU will agree to find a negotiated solution before creating serious damage to the aviation industry as well as to trade relations and the global economy.’ Adding that, ‘The WTO has already found that the U.S. failed to address illegal subsidies causing harm to Airbus. This will provide the EU with grounds to claim countermeasures on U.S. products at a level that could exceed U.S. sanctions.’.

Airbus CEO Guillaume Faury said his company is ‘hopeful that the U.S. and the EU will agree to find a negotiated solution before creating serious damage to the aviation industry as well as to trade relations and the global economy.

The possibility of a new trade war appeared shortly after weak data on US manufacturing and employment, which caused a new wave of panic in the market as global recession fear become better-grounded. The ISM Manufacturing index dipped down to 47.8 and ADP Nonfarm Employment came out at 135K against the forecast of 140K, below the previous result of 157K, adjusted down from 195K. 

The spooked stock market tipped the Dow and S&P500 indexes into their biggest one-day percent decline since August 23rd. Today all eyes are on ISM services PMI, which comes out at 14:00 GMT and then data on Nonfarm Payrolls that comes out tomorrow at 12:30 GMT to see if market recession concerns are confirmed.

Looking at 4HTF of the EURUSD chart, we can see several signals that it’s possible to open long positions in the short term, with a reminder that the global trend is bearish. The local trend line down of June 2019 coincides with the 200EMA. There is a Golden TK cross and the Lagging Span intersection of the price chart, and an inversed head and shoulders pattern. The price broke it and closed above 50 EMA, entered the Ichimoku Cloud, and stopped at the 50% Fibo level (1.09734).

As a result, risky traders may trade the correction with target areas up, first at the level of 1.09734 (50% Fibo), then resistance at 1.09852, followed by the 61.8% Fibo at 1.09957, which coincides with the local trend line down.

Conservative traders should wait for the downtrend to continue, with target areas at 38.2% Fibo 1.09511, then 23.6% Fibo at 1.09236 and then the min. at 1.08791.

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