USDCHF Heads Lower on US Trade War Escalation
USDCHF Talking Points
- US Trade sanctions on Chinese imports will bring retaliatory measures.
- New US National Security advisor John Bolton will likely harden foreign policy.
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USDCHF Boosted by Trade War Fears
Financial markets on Friday went into full-on risk adverse mode after the imposition of US trade tariffs on China and the promotion of foreign policy hawk John Bolton to the US National Security adviser. US president Trump announced plans to introduce a 25% tariff on USD60 billion of Chinese imports, a move that will bring a sharp reaction from Beijing over the coming days. These tariffs will add to fears that any further escalation of trade restrictions could weigh on global growth.
US President Trump also replaced his National Security advisor HR McMaster with known foreign policy hawk John Bolton, a move that will add to fears that the US will look to take a harder line with North Korea and Iran.
With markets de-risking, traditional safe-haven markets, gold, Japanese Yen and the Swiss Franc all saw sharp gains overnight. USDCHF currently trades below its 200-day ma, a negative set-up, indicating further losses may lie ahead. Support lies around the current 50-day ma and a cluster of minor highs and lows around 0.9400 before the near three-year low of 0.9185 comes into play. The stochastic indicator is signalling that the market is in extreme oversold territory, so the next move lower may be delayed for now.
USDCHF Price Chart Daily Time Frame (October 5, 2017 – March 23, 2018)
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--- Written by Nick Cawley, Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.