Never miss a story from Christopher Vecchio

Subscribe to receive daily 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 DailyFX 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 your 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:

- Instead of blocking Chinese companies from investing in American companies outright, the Trump administration will now use CFIUS to oversee purchases by foreigners.

- The slight change in tactic is seen as a much less aggressive approach towards China, suggesting that a US-China trade war may never truly materialize.

- Sentiment for the US Dollar remains mixed despite the pullback in recent day.

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) is working on its second day of gains in a row as concerns about a full-blown US-China trade war continue to diminish thanks to a change in tactics by the Trump administration.

By choosing to use the Committee on Foreign Investment in the United States (CFIUS) to handle ownership transactions with Chinese buyers - thereby including the US Congress in the decision making- the Trump administration is taking a much less aggressive stance towards China than previously thought.

If the US executive branch is no longer acting unilaterally on trade issues and instead working with a legislative branch that is more open to free trade, odds of a serious trade war developing with China have dropped.

Generally speaking, such a change in tactic should be considered a positive development for the US Dollar, as a US-driven trade war would be a net-negative for the US Dollar. The news overnight is indeed producing a bullish reaction by the greenback, and as would be expected given that the US Dollar is trading like a risk currency, US equity futures are trading higher alongside the buck.

DXY Index Price Chart: Daily Timeframe (July 2017 to June 2018) (Chart 1)

US Dollar Gains Build as Trump Changes Tactics on Trade

The bounce by the US Dollar over the past two days has come at a critical time for the DXY Index, with price having fallen back to the daily 21-EMA for the first time since the June 14 ECB rate decision. Throughout early-June, the daily 21-EMA was been a magnet for support in the DXY Index, with no two consecutive daily closes coming below the moving average since April 17 and 18.

More evidence that a US-China trade war will be avoided could be the catalyst necessary to help the DXY Index return back to its highs from earlier this month; for now, the bearish daily key reversal high at 95.53 is formidable resistance before the uptrend can be declared as having been resumed.

Read more: Euro Forecast: Euro Turn to June CPI for Next Catalyst


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

Follow him on Twitter at @CVecchioFX