Never miss a story from Christopher Vecchio

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from Daily FX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Christopher Vecchio

You can manage you subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Talking Points:

- Overnight China announced retaliatory tariffs to the tune of $50 billion on imported US goods, scheduled to take place once the US tariffs on Chinese imported goods goes into effect.

- For now, weakness in US equity market futures helping keep the US Dollar afloat; historically, trade tensions have led to USD weakness.

- Sentiment for the US Dollar remains negative as the new quarter gets under way.

For longer-term technical and fundamental analysis, and to view DailyFX analysts’ top trading ideas for 2018, check out the DailyFX Trading Guides page.

The US Dollar (via the DXY Index) has been treading water the first few days of the new month and the new quarter, seemingly unmoved by intensifying trade tensions with respect to NAFTA and China. But that could change in the days ahead, especially after, overnight, China announced retaliatory tariffs to the tune of $50 billion on imported US goods, scheduled to take place once the US tariffs on Chinese imported goods goes into effect.

There are still 'off ramps' available before the tit-for-tat tariffs spiral into a full-blown trade war: the US could rollback its plans to impose tariffs on imported Chinese goods, which in turn would nullify China's plans to impose tariffs on imported US goods.

But given the central figure in these trade tensions - US President Trump - it seems unlikely that he will be willing to take a 'loss' publicly without an offsetting 'win' elsewhere. This of course means that the US could double-down on its efforts to renegotiate NAFTA, in an effort to save face.

For now, weakness in US equity market futures helping keep the US Dollar afloat; historically, trade tensions have led to USD weakness. But while FX markets have shrugged off the headlines - for now - Gold appears to be primed to take advantage of the risk unfolding (see the above video).

Aside from the news wire, traders would be wise to keep an eye on upcoming US economic data this morning as they pertain to shaping expectations for the Friday release of the March US Nonfarm Payrolls report.

The March US ADP Employment Change release is due to show the world’s largest economy added +205K jobs, a pace that would easily keep the US unemployment rate near 17-year lows. According to the Atlanta Fed’s Jobs Calculator, the US needs to add +106.9K jobs per month in order to keep the unemployment rate at its current level of 4.1%.

Later in the day, the March US ISM Non-Manufacturing/Services Index, which covers roughly two-thirds of economic activity in the United States, is due in at 59.0 from 59.5 – a slight decline but still a robust pace of expansion.

See the above video for technical considerations in the DXY Index, EUR/USD, USD/JPY, GBP/USD, Gold, and the S&P 500.

Read more: US Dollar Holds Ground as Risk Sentiment Slides, Eurozone Data Weakens

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form